The decline in Nvidia (NVDA) stock causes instability in worldwide semiconductor shares.

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Global semiconductor shares experienced unstable trading on Tuesday following a decline in the shares of Nvidia during the previous trading session. Shares of chip companies in Europe and Asia dropped initially as investors responded to Nvidia’s significant loss in market cap over three trading days. However, some stocks rebounded as the U.S. chip giant’s shares rose by approximately 5.5% by Tuesday 11:40 a.m. ET.

The shares of Switzerland-based semiconductor company STMicroelectronics closed the day down more than 1.4%. In Europe, ASML, the Dutch chip equipment giant, recovered from losses earlier in the day to end up 0.18% as Nvidia shares improved. ASML plays a crucial role in the global semiconductor market by manufacturing and selling extreme ultraviolet lithography (EUV) machines used by chipmakers for producing integrated circuits.

Soitec saw a slip of 0.1%, while ASMI advanced by 0.6% after a initial fall during the session. The pan-European Stoxx 600 closed approximately 0.3% lower. Asian semiconductor shares also experienced a day of volatility with Taiwanese chip firm MediaTek’s shares falling by 1.8% and South Korean company Samsung dipping by 0.3%.

TSMC, the largest chipmaker globally, and SK Hynix managed to resist the negative sentiment, rising by 0.5% and 0.9% respectively.

Nvidia shares recover

The turmoil follows a sharp decline in Nvidia shares over three consecutive sessions, dropping by 13% from the all-time highs on Thursday. On Monday, Nvidia closed down by 6.7%, marking its second-largest drop of the year. However, the shares began to bounce back in early trading on Tuesday.

Last week, Nvidia surpassed Apple and Microsoft as the most valuable U.S. company, reaching a market cap exceeding $3.4 trillion. By the end of Monday, Nvidia had wiped out over $540 billion from its market value after hitting a record high on Thursday.

Nvidia claims that the demand for its high-demand artificial intelligence GPUs remains strong. Major companies like Microsoft, Google, Amazon, Oracle, and Meta are investing billions of dollars in Nvidia’s chips to power their data centers and cloud services.

Later this year, Nvidia is set to launch its next-generation AI chips, Blackwell, which some analysts believe could initiate another substantial growth cycle for the chip manufacturer and its collaborators.

— CNBC’s Kif Leswing contributed to this article.

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