NEW YORK – Nvidia Corporation (NASDAQ:NVDA) slipped 1.4% in premarket trading on Friday, wiping approximately $67 billion from its market capitalization at a valuation of roughly $4.77 trillion. The decline rippled through the broader market, dragging down the S&P 500 and Nasdaq futures, as concerns over the sustainability of the AI chip rally resurfaced.
The move highlights the outsized influence of Nvidia on benchmark indexes. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) held Nvidia at a 7.50% portfolio weight as of June 25, a concentration that exceeds the combined allocations to energy (3.09%) and utilities (2.26%). When Nvidia drops 1.4%, it exerts an approximate 0.11 percentage point drag on the ETF, accounting for nearly a fifth of the decline in S&P 500 futures before the open, according to Reuters data.
Other chip stocks also came under pressure. Intel Corporation (NASDAQ:INTC) and Advanced Micro Devices (NASDAQ:AMD) each lost over 3% in premarket trade, while Micron Technology (NASDAQ:MU) slipped amid broader semiconductor weakness. Nasdaq 100 futures fell 0.53% as of 5:29 a.m. ET, reflecting a cautious start to the session.
Earnings Power and Dividend Impact
Nvidia's dominance is rooted in its explosive earnings growth. For the first quarter of fiscal 2027, the company reported revenue of $81.6 billion, up 85% year-over-year, with data center revenue surging 92% to $75.2 billion. CEO Jensen Huang described the AI factory buildout as the "largest infrastructure expansion in human history."
On Friday, Nvidia also paid its quarterly dividend of $0.25 per share, up from $0.01 a year earlier. At Thursday's closing price of $195.74, the dividend yield is roughly 0.13%, far eclipsed by the 1.4% premarket move, which was about 11 times the dividend's value.
Supply Chain and Cost Pressures
Micron, a key memory supplier to Nvidia, revealed that customers including Nvidia have committed to $22 billion in supply agreements featuring take-or-pay clauses, deposits, and price floors. While Jake Behan, Direxion's capital markets chief, noted that "visibility is improving," he cautioned that downside risks are merely delayed, not removed. Micron CEO Sanjay Mehrotra expects "tight conditions" in the memory market to persist beyond 2027, and Daniel Newman, CEO of Futurum Group, said supply constraints will maintain "premium pricing" in memory. This supports the AI supply chain but implies rising costs for Nvidia's largest customers.
Apple Inc (NASDAQ:AAPL) dropped 6% on Thursday after warning it cannot shield buyers from escalating memory and storage prices. Mark Ellis, CIO at Nutshell Asset Management, flagged concerns over hyperscalers' data-center spending and their "return on invested capital," a tension visible across the market.
Networking Win and Rate Risks
Nvidia scored a notable victory in networking. According to IDC data cited by Business Insider, Nvidia led the data center Ethernet switch market by revenue in the first quarter of 2026, generating $2.1 billion and capturing 21.5% share. Huang told shareholders that Spectrum-X is "now larger than all other Ethernet networking peers combined."
However, the broader market faces headwinds from rising interest rates. The S&P 500 has gained over 7% in 2026, but volatile chip stocks have put the Nasdaq on track for a weekly decline. "The live question is, are higher interest rates going to threaten" semis' leadership, said Julia Hermann, global market strategist at New York Life Investment Management. Investors are now looking ahead to the U.S. payrolls report on Thursday, with markets closed on Friday for the Independence Day observance.
