The sharp fall that wiped $279 billion off the market value of Nvidia (NVDA) on Tuesday, sending the Philadelphia Semiconductor Index (SOX) into its biggest slump since April, is evidence of increased volatility on the markets.

According to Ipek Ozkardeskaya, senior analyst at Swissquote, there are two main explanations for this situation. The first is what she describes as ‘AI fatigue’: despite the exceptional results announced by Nvidia last week, investors were not impressed.

The second reason is linked to a changing macroeconomic context, with the US Federal Reserve (Fed) expected to start cutting interest rates as early as September this year. This change has led to a rotation of investment away from technology companies towards the more cyclical sectors of the market, which could result in a significant correction for shares such as Nvidia, which have reached very high valuation levels.

Bloomberg videos, provided by MT Newswires