Wall Street has its best week since August while Nvidia has its worst run since 2012, and both of AI’s big tests arrive within days

Wall Street closed out its best week since August on Friday, but the stock that defined the AI boom went the other way.

The S&P 500 slipped 0.4 per cent on Friday to 7,561.67 and the Nasdaq 0.9 per cent to 25,136.27, while the Dow edged up 0.1 per cent to 52,347.55. Over the week all three rose more than 2 per cent: 2.5 per cent for the S&P 500, 2.3 per cent for the Nasdaq and 2.1 per cent for the Dow, ending four straight losing weeks for the S&P 500 and Nasdaq.

Nvidia did not join in. Its shares fell about 2 per cent on Friday, after a drop of more than 4 per cent on Thursday, and were down about 12 per cent for the week. That is its sixth weekly fall in a row, the longest such streak since October 2012, and its market value closed below US$4 trillion.

What is weighing on Nvidia?

Jensen Huang resigned as chief executive on Thursday after 33 years, amid a board investigation, and chief financial officer Colette Kress is running the company on an interim basis. Investors are now pricing in the uncertainty of an AI giant with no permanent leader.

HSBC downgraded the stock to hold on Friday and cut its price target to US$170 from US$365. Reports that Nvidia’s board had approached Arm chief executive Rene Haas about the top job sent Arm’s own US shares down about 6 per cent.

The selling spread through the chip sector. The Philadelphia Semiconductor Index fell 3.4 per cent, AMD dropped 8.8 per cent and Broadcom 4.8 per cent. AI cloud companies CoreWeave and Nebius also fell sharply, and the S&P 500’s technology sector lost 1.7 per cent, the worst of its 11 sectors.

Why did the rest of the market rise?

Money moved out of chips rather than out of shares. Apple hit an intraday record of US$360.80 on Friday, and the gains across the week followed four straight losing weeks.

There were cross-currents. Microsoft finished 0.2 per cent higher after recovering from a global Outlook and Teams outage, and airline shares fell 1.4 per cent when the US aviation regulator stopped every departing flight in the country minutes before the close.

What about interest rates?

US producer prices for October came in slightly below forecasts but were still up 6.5 per cent on a year earlier, the biggest annual rise since November 2022. Markets are fully pricing at least a quarter-point Federal Reserve rate rise in December, with about a one-in-ten chance of a half-point move, after officials including San Francisco Fed president Mary Daly and Boston’s Susan Collins signalled increases were likely.

The 10-year Treasury yield rose above 5.1 per cent, touching its highest level since October, and the US dollar index hit its highest since April 2025.

What does it mean for Australian investors?

The ASX opens on Monday after a week in which Wall Street’s direction was set by chips and rates rather than by the broader economy. A stronger US dollar and higher US yields usually weigh on the Australian dollar and on local growth stocks.

Many Australians hold Nvidia without picking it: it is one of the biggest weights in the S&P 500 and global index funds sold through super and ETFs, so its slide flows straight into balances.

What are the big tests?

Two arrive within days. Nvidia reports third-quarter results at 5pm US Eastern time on Tuesday, 6am AWST on Wednesday, its first since Huang’s departure: investors will be listening for who is in charge and whether demand from the biggest AI customers is holding.

Anthropic’s share float is expected next week, with bankers reportedly considering pricing it above its US$70 to US$78 range. It is the first big test of whether investors still want to buy into AI at these prices, and whether money leaves older AI names to make room for it.