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Nvidia (NVDA.US), the AI chip titan dubbed by Wall Street giant Goldman Sachs as "the most important stock on the planet," saw its market capitalization evaporate by approximately $279 billion during Tuesday's US stock trading session. This triggered a massive sell-off in the chip sector and the broader US tech stocks, with Asian chip stocks also taking a hit on Wednesday's Asian trading session. However, market bottom-fishing troops, who adhere to the "buy the dip" strategy, seem to be on the lookout for opportunities to scoop up chip stocks like Nvidia that benefit from the AI boom, with several analysts also betting on a wave of bargain-hunting purchases for the battered chip stocks.

Just four weeks after the US stock market experienced a sharp decline due to "Black Monday," which saw global investors fleeing risk assets, Nvidia, the chip giant that once topped the list of "the world's most valuable publicly traded companies," sparked another "US stock sell-off wave." Nvidia's stock price fell nearly 10% during regular US trading, wiping out $279 billion in market value, marking the largest single-day market value loss in the history of US stocks. Including the post-market drop that reached as high as 2%, its cumulative market value evaporated by slightly over $300 billion, a figure that even exceeds the combined market capitalization of US chip giants AMD (AMD.US) and Intel (INTC.US).

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For the US stock market, September has historically been a turbulent month, with the "September curse" long haunting US stock investors—the S&P 500 and Dow Jones have seen the most significant declines in September since 1950. However, there are other substantial reasons for the bleak start to the US stock market on the first trading day of September this year.

Concerns about Asian economic growth have shaken commodity markets from oil to copper, and the latest US manufacturing data have been very weak. However, the payment prices indicated by the manufacturing data have risen, which is a potentially worrying sign for inflation hawks. The market fears that the Federal Reserve's interest rate cut may not meet the current market's general expectation of 100 basis points. In addition, weak economic data, unoptimistic tech giant earnings reports, and their massive AI spending suggest that the promise of artificial intelligence to reshape global economic growth is far from realized, and the prospects for "AI monetization" seem increasingly pessimistic. These latest signals have played the most critical catalytic role in the chip stock-induced US stock market rout, making it difficult for chip stocks and the high valuations of the entire US stock market to justify themselves.

In the Asian stock market, the share prices of top Asian chip companies, including SK Hynix (SK Hynix Inc.), TSMC, Tokyo Electron, and Advantest, have plummeted amid a general global stock market downturn, bringing a "tightening moment" for investors who have benefited from the surge in chip stocks in recent years.

The VIX index, known as Wall Street's "fear gauge," soared rapidly on Tuesday, but there may be more potential sources of financial market volatility this week. Importantly, this includes the US employment report and unemployment rate data to be released on Friday. Investors will closely monitor the report, fearing a possible slowdown or even a "recession expectation" in the US economy, which could potentially have a cascading negative effect on Nvidia's stock price, as well as on the stock prices of Nvidia's chip suppliers in Asia and other major Asian chip giants.

However, bottom-fishing funds may be about to flood into chip stocks. Judging from the hottest investor forums on Reddit and social media platform X (formerly Twitter), the "YOLO" faction—namely, the aggressive investment group that adopts the "You Only Live Once" philosophy, keen on betting on a short-term rebound of a particular stock through "gambling-style" full positions or high-leverage options—along with the broader "bottom-fishing force" seems to have ample ammunition ready to buy on the dip those chip stocks that have been hit hard recently but benefit from the AI boom.

On Wall Street, this "buy the dip" sentiment is particularly strong, especially among the US stock bulls who firmly believe that this round of correction has squeezed out most of the "AI bubble." They anticipate that companies that can continue to profit from the AI wave in the future market may enter a new round of "main uptrend" surges, such as Nvidia, AMD, TSMC, Advantest, and Broadcom, among other popular chip stocks. Chips are an indispensable core infrastructure for popular generative AI tools like ChatGPT, and these popular chip stocks can be considered the biggest winners of the AI boom.

Analysts from major banks like Bank of America and Morgan Stanley remain optimistic about Nvidia's stock price trajectory and are loudly proclaiming that the "buy the dip" opportunity has arrived. Among them, Bank of America analyst Vivek Arya recently reiterated his "buy" rating for Nvidia, calling it the "best industry choice," stating that the decline in Nvidia's stock price provides a good entry point, and raising his target price for Nvidia from $150 to $165, compared to Nvidia's closing price of $108 on Tuesday.The resurgence in the chip industry, spearheaded by AI chips, is becoming increasingly clear. Recent data released by the Semiconductor Industry Association (SIA) shows that global semiconductor sales in the second quarter of 2024 reached a staggering $149.9 billion, marking an 18.3% increase compared to the second quarter of 2023 and a 6.5% growth over the already robust first quarter of 2024. In July, global semiconductor sales hit $51.3 billion, up 18.7% from July 2023 and a sequential increase of 2.7% from the $50 billion in June 2024.

Research firm Gartner anticipates that the development trends of generative AI and large language models (LLMs) will comprehensively drive the deployment of high-performance servers based on AI chips in data centers. The firm forecasts that the global AI chip revenue will reach approximately $71 billion in 2024, a significant 33% increase from 2023, and is expected to hit $92 billion by 2025.

Here is a summary of key insights from institutional investors and analysts:

Jung In Yun, CEO of Singapore's Fibonacci Asset Management Global Pte., stated, "Although we expect volatility to surge again in the coming period, we still believe that every sell-off is a buying opportunity. In this regard, we anticipate that Asian stocks will rebound swiftly." He emphasized, "We think concerns about the demand for artificial intelligence are entirely overblown, and we may see robust demand for AI applications and their supporting infrastructure hardware in the first half of next year."

"Investors should look for stocks that are closely related to the AI trend but have not yet enjoyed the strong price increases like Nvidia, such as the South Korean chip giant Samsung Electronics," Yun added.

Andrew Jackson, a strategist at Singapore's Ortus Advisors Pte., said, "It feels a bit like a tempest in a teapot after August; we are not likely to see a severe panic sell-off like last time." The strategist added that he would opt to buy Asian chip stocks on dips, such as Micronics Japan Co. and Advantest.

Charu Chanana, head of FX strategy at Singapore's Saxo Bank, said, "The September curse coincides with the memory of the sell-off that followed the initial August non-farm payroll report. With a significant employment report due this week, traders are currently risk-averse," she emphasized. "I would choose a relatively cautious approach here."

Randy Abrams, a researcher at UBS Global Asset Management, said, "Now investors are beginning to question whether the return on AI investments is optimistic. When they see some macro data that is not as strong, they seem a bit nervous. So, there is a question of whether the music will continue to play, and whether the strong AI hardware spending by cloud computing giants will still persist."

"Weak data is driving fluctuations in AI stocks, but the reality we see from the supply chain and hyperscale enterprises is that they will continue their robust AI spending pace, which is why investors may have chosen a buy-the-dip strategy a few weeks ago, and possibly will do so immediately."

Dayeon Hong, a multi-asset portfolio manager at Seoul's Shinhan Asset Management, said, "The stock market rebounded quickly after a sharp decline in August, so what we are seeing today is just a partial reversal of that rebound." "As market volatility is likely to continue to increase on Friday, investors are taking preemptive defensive positions, which seems to be anticipated."Mitsubishi UFJ Morgan Stanley Securities' Senior Investment Strategist in Tokyo, Kohei Onishi, stated, "Today's decline in Asian stock markets is merely a reaction to the significant overnight drop in the New York stock market. Given that the U.S. stock market has been on a strong upward trajectory for a long time, a drop of this magnitude is not particularly unusual." "Ahead of the Federal Reserve's Federal Open Market Committee meeting on September 17th and 18th, we may continue to witness market volatility, with the potential for significant sideways swings throughout the month. However, once the uncertainties that have recently swept through the market are resolved, we could see a substantial rebound in stock prices by year-end."