NVIDIA stock drops 3.6% as hot inflation data, China share losses, and Microsoft's AI chip launch weigh on investors

NVIDIA's stock fell 3.6% in afternoon trading after a stronger-than-expected US inflation report for September shook markets, with annual inflation reaching 3.7% and raising expectations for another Federal Reserve rate hike. The hot inflation data drove up Treasury yields, disproportionately pressuring high-valuation growth stocks like NVDA. Company-specific concerns compounded the macro headwinds: IDC data showed NVIDIA's share of China's AI data center chip market fell to 34% in H1 2026, with shipments down 44% year-over-year as Huawei expanded. Microsoft's launch of its third-generation Maia 300 AI chip, with plans for over one million units from 2027, also fueled investor worries about cloud providers reducing reliance on NVIDIA GPUs. CEO Jensen Huang's remarks in London about stopping chip deliveries to customers developing uncertain AI added to concerns, though aimed at AI safety. The broader market fell with Nasdaq down 2.1%, and NVDA hit a session low of $220.21, well below its 52-week high of $243.37. A $235 billion buyback announced in late September failed to generate lasting buying interest.