Google's AI Investment Boost Fails to Lift Nvidia as Funds Shift to Micron and SK Hynix

Despite Alphabet Inc. (GOOGL-US) reporting better-than-expected financial results and announcing a significant upward revision to its capital expenditure guidance, Nvidia (NVDA-US) stock declined 1.6% on Thursday (23rd).

Market funds appear to be rotating from the largest technology stocks by market capitalization to specialized semiconductor companies focused on chips and memory. In contrast, Micron Technology (MU-US) stock rose 3.2%, and SK Hynix ADR (SKHY-US) surged 2.6%.

Alphabet's increased capital expenditure is expected to be primarily directed toward building AI infrastructure, including investments in chips and memory. This helps alleviate market concerns about the sustainability of high AI investment and chip price booms, serving as a major positive catalyst for the semiconductor supply chain.

Theoretically, these developments should benefit Nvidia, but the stock has not immediately reflected this positive news.

Recently, there has been a clear market trend where investors sold chip stocks and rotated into the largest tech stocks by market cap. However, as market sentiment turns optimistic about AI capital expenditure outlook, funds may flow back into specialized chip and memory players like Micron and SK Hynix, while taking profits from large-cap tech holdings—including Nvidia.

Although Nvidia remains the leader in AI chips, its rising market capitalization has positioned it among the world's most valuable public companies, increasingly categorizing it as a mega-cap tech stock. As a result, during market rotations, it may become a target for rebalancing when investors shift toward smaller and mid-sized semiconductor stocks.

On the other hand, despite Alphabet delivering far stronger financial results than expected, the market remains cautious about its continuously expanding capital expenditure, causing its stock to drop as much as 7.1% at one point.