NVIDIA Stock Slides on Report of Halted AI Program, Hawkish Fed Signals

NVIDIA (NVDA) shares fell more than 4% in afternoon trading on August 28, reversing a significant portion of gains from the previous session. The decline followed a Wall Street Journal report that the chipmaker halted parts of an initiative designed to help smaller cloud providers finance NVIDIA-powered infrastructure.

AI Partnership Program Paused

The sell-off was primarily triggered by a report that NVIDIA paused its AI Compute Partnership program. According to the Wall Street Journal, the halt came after some potential partners raised objections to the company seeking greater control over which customers could use the systems.

Internally, employees also reportedly voiced concerns that the revenue-sharing arrangement could elevate regulatory and antitrust risks for the company. This development introduces uncertainty around a key growth initiative, raising questions about governance and potential regulatory scrutiny.

Post-Earnings Pressure and Margin Outlook

The stock's pullback was compounded by a "sell the news" dynamic following the company's exceptional second-quarter earnings for fiscal year 2027, which were released on August 26. While the results significantly beat analyst expectations, some investors are now taking profits.

Key figures from NVIDIA's Q2 FY2027 earnings include:

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• Revenue: $96.2 billion, an increase of 106% year-over-year.
• Adjusted EPS: $2.22, up 120% year-over-year.

Despite the strong results, the company's forward guidance noted that gross margins are expected to compress to a range of 71–72% in the fourth quarter due to rising memory prices. Separately, a report of a potential $12.9 billion acquisition of AI platform Hugging Face added to investor uncertainty regarding capital allocation.

Broader Market Headwinds

A more restrictive macroeconomic outlook also weighed on NVIDIA and other technology stocks. Speaking at the Jackson Hole Economic Policy Symposium, Federal Reserve Chair Kevin Warsh delivered a hawkish message, stating that inflation remains too high and that underlying trends have not improved meaningfully.

These comments increased market expectations for a potential interest rate hike, sending the two-year Treasury yield higher. The rate-sensitive Nasdaq Composite index fell in response, dragging down high-valuation technology stocks, including semiconductor peers like Advanced Micro Devices and Broadcom.