Four weeks after US stocks buckled amid a global flight from risk assets, chipmakers touched off another bout of equities selling when a pair of industry analysts rekindled worries that the mania surrounding artificial intelligence had gone too far.

Nvidia shares tumbled 9.5 per cent, wiping out $US278.9 billion ($415.5 billion) in the biggest loss of value ever for a US stock. It meant Nvidia’s market capitalisation dropped by the equivalent of the entire value of energy giant Chevron in one day.

It is now down 14 per cent in the three sessions since it reported earnings that failed to live up to lofty expectations. All 30 members of the Philadelphia Semiconductor Index sank at least 5.4 per cent, with On Semiconductor, KLA and Monolithic Power Systems down more than 9 per cent. The Nasdaq 100 sank almost 3.2 per cent.

Nvidia shares lost another 2 per cent in late trading after the US Justice Department sent subpoenas to it and other companies as it seeks evidence that the chipmaker violated antitrust laws.

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There were other reasons for the bleak start to what is historically a volatile month for stocks. Worries about China’s growth shook commodities markets from oil to copper. US manufacturing data came in light and showed an uptick in prices paid, a potentially worrying sign for inflation hawks. But most catalysing for the tech rout were the fresh warnings that AI’s promise to rewire global economies was far from being realised, making it hard to justify lofty valuations.

That was the gist of views expressed in separate commentaries from JPMorgan Asset Management and BlackRock Investment Institute. Michael Cembalest, chairman of market and investment strategy at JPAM, warned that spending on AI won’t be justified unless demand for AI services from companies outside of tech starts to increase. For Jean Boivin head of BlackRock Investment, “patience is needed” before AI takes off, a process of “years, not quarters.”

Those warnings, of course, aren’t new. Alphabet shares got hit in July after it reported a spike in AI spending with no promise of a commensurate bump in profits, prompting a rotation out of big tech. But the two latest cautions landed in a market that rallied to just short of records in late August, largely on the promise that the US economy won’t crater before the Federal Reserve delivers rate cuts later this month.

“Are we actually going to stick this soft landing, or are we going to get some type of a report later this week that shows unemployment is starting to rise substantially?” said Brian Mulberry, client portfolio manager at Zacks Investment Management. “That’s where you’re starting to see a lot of this volatility coincide, and it’s just hitting the most overvalued sectors first, and people are starting to look for actual earnings growth, real revenues on the balance sheet. And more importantly than anything, really stable forward guidance.”