US Tech Stocks Rattled by Federal Reserve Hawkish Stance

US tech stocks were hurt this week by a continued bullish stance from the Federal Reserve.

NAS 100: Daily Chart

NAS 100: Daily Chart

The NAS 100 index dropped after the Fed’s interest rate decision to 14,824. The index will now look for support at this level, or around 14,500–600.

There was tech M&A news on Thursday, with Cisco Systems agreeing to buy cybersecurity software provider Splunk. The deal was valued at $28 billion, and analysts at Wedbush said it could start a “tidal wave” of activity amongst tech security and AI firms.

The jury is still out on that as macroeconomic struggles continue to hurt US stock indices. The Nasdaq will still have to hold support or face a larger breakdown in price. That could put an end to the AI-driven tech rally.

The year’s tech darling, Nvidia, continues to fall, down 14% for the month, while CEO Jensen Huang continues to sell shares. Huang sold 59,376 shares from Sept. 12 to 13, according to two SEC filings. The selling was done in different tranches, with cumulative sales over the two days amounting to $26.9 million. However, a week ago, Huang sold shares worth $42.8 billion through the exercise of stock options.

Some social media users also caused a stir after they raised suspicions over Nvidia’s revenue performance in the second quarter. The company’s sales doubled as the cost of goods sold rose only 7%.

They related it to Nvidia’s $100 million investment in CoreWeave this year, with the company later raising $2.3 billion in debt from Magnetar Capital and Blackstone by pledging Nvidia chips as collateral.

An analyst at Bernstein said that there was no issue, saying that the interest in CoreWeave was justified. “As companies like CoreWeave build businesses based on NVIDIA GPUs, it is in NVIDIA’s interest to see them succeed, given that their presence offers a counter to the threat of bigger cloud service providers developing their own internal AI offerings,” he said.

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