U.S. tech stocks, led by Nvidia, saw initial gains fade due to concerns about high valuations in the technology sector. Nvidia’s shares dropped 2.2% despite an earlier 5% surge following strong results that eased worries about an AI bubble but raised questions about ROI from massive spending.

The global bullish sentiment waned as U.S. chipmakers AMD and Micron tumbled, dragging down the Philadelphia SE Semiconductor Index by 2.8%. Concerns remain about hyperscalers overspending on AI infrastructure, impacting semiconductor sales and stock performance.

Microsoft’s shares fell 1.3%, while Alphabet traded flat. The European tech index closed with a modest 0.1% gain, with ASML only rising by 0.4% after a surge earlier in the session. U.S.-listed TSMC shares dipped 0.6%, contrasting with gains in Asian chip suppliers like SK Hynix.

Nvidia CEO dismissed bubble concerns, highlighting strong demand and bookings extending into 2026. J.P. Morgan analysts praised Nvidia’s results as a testament to strong execution and integration. Despite concerns about external risks and customer reliance, Nvidia remains a key player in the AI revolution with a $5 trillion valuation.

Nvidia’s stock, down nearly 8% in November, has seen a 36% increase for the year. Its forward P/E ratio is 28.44, lower than AMD’s 35.70 and significantly below Intel’s 62.38. Revenue forecast surpasses estimates, with margins expected to remain in the mid-70% range through fiscal year 2027.

Demand for Nvidia’s products continues to outpace supply, with strong sales in the data center segment. Analysts remain positive about Nvidia’s future prospects, citing aggressive buying from hyperscalers and server makers as key drivers of growth.

Read more at Yahoo Finance: Global tech shares falter as Nvidia-led rally stalls