Broadcom surged, NVIDIA fell, and "AI chips" affected the entire US stock market

On Friday, the U.S. stock market fluctuated and retreated after hitting a historic high during the session, ultimately closing down 0.3%.

The core contradiction in the market revolves entirely around the theme of "AI chips": Broadcom's stock soared due to reports of a deep collaboration with OpenAI, while NVIDIA's stock fell, dragging down the tech sector.

Meanwhile, a U.S. employment report that fell far short of expectations not only solidified the Federal Reserve's interest rate cut expectations for this month but also intensified concerns about the economy potentially slipping into recession.

The "Ice and Fire" of AI Chip Giants

The most critical driving force in the market that day stemmed from changes in the competitive landscape of the AI chip sector.

Reports indicated that Broadcom, one of the top ten weighted stocks in the S&P 500 index, will begin helping OpenAI design and produce an AI chip starting in 2026. Boosted by this news, Broadcom's stock surged by 9.4%, while NVIDIA's stock fell by 2.70%, becoming a significant factor dragging down the S&P 500 index.

The market generally believes this reflects investors' direct concerns about intensified competition in the AI chip sector. NVIDIA's decline also transmitted to other tech stocks, with its competitor AMD's stock dropping by 6.6%, and Microsoft recording a 2.6% decline.

It is worth mentioning that during a recent earnings call, NVIDIA CEO Jensen Huang confidently told analysts that NVIDIA's energy efficiency is the best among all computing platforms, making it difficult for customers to switch to competitors' hardware.

Weak Macro Data, Rate Cuts and Recession Concerns Coexist

Another main thread of market sentiment comes from the macroeconomic level. The non-farm payroll report released on Friday showed that the U.S. added only 22,000 jobs in August, far below the market expectation of 75,000. Additionally, the data for June was revised to show a contraction for the first time since 2020, and the unemployment rate slightly rose to 4.3%.

This weak employment data further solidified traders' bets that the Federal Reserve will cut interest rates at its meeting on September 16-17. However, the data also sparked deep concerns about the overall economic situation. Matt Maley, Chief Market Strategist at Miller + Co., stated that consecutive weak employment reports will inevitably raise investors' doubts about economic growth, and a weakening economy means slower corporate profit growth, which is not favorable for a stock market that is already highly valued.

Market interpretations of rate cuts are also filled with divergence. Kristina Hooper, Chief Market Strategist at Man Group, believes that sectors like small-cap stocks typically benefit from rate cuts, as evidenced by the Russell 2000 index rising 0.5% on Friday. Meanwhile, Rebecca Patterson, former Chief Investment Strategist at Bridgewater Associates, warned that unless the economy sharply slows down, the Federal Reserve's rate cut may not meet market expectations, and a sharp economic slowdown itself is not good for the stock market.

Market Divergence Intensifies, Risk Aversion Rises

Outside the fluctuations of technology stocks, other sectors of the market have also shown significant divergence. Cyclical companies, closely related to economic fluctuations, performed poorly, with both the energy and financial sectors declining by more than 1.8%. The drop in energy stocks is related to falling oil prices, as Saudi Arabia previously expressed a desire for OPEC+ to consider restoring more production.

On the other hand, there has been an increase in market demand for safe-haven assets. Due to concerns about the economic outlook and geopolitical factors, investors have flocked to safe-haven assets like gold, with the gold mining stock index breaking above its highest point since 2011. Interest rate-sensitive residential builder stocks also performed well, with a benchmark S&P index for the industry rising by 2.1%.

In terms of individual stocks, Tesla's share price rose by 3.6% after proposing an unprecedented compensation plan of up to $1 trillion for its CEO, Elon Musk. Meanwhile, sportswear brand Lululemon plummeted by 19% due to a downward revision of its performance outlook.

Looking ahead, the market will closely monitor the CPI inflation data to be released next week, as well as key events such as Apple's annual iPhone launch