Nvidia, the AI chipmaking titan that was briefly the world’s most valuable company, suddenly finds itself in an unfamiliar position: the main rut.
Nvidia ( NVDA ) had its worst day in stock market history on Tuesday, as measured by the loss of total market value. The 9.5% decline in the stock price reduced its value to an astonishing $279 billion, surpassing the previous record of $240 billion set by Meta in 2022.
To put that horror into context, only 27 companies on the planet were worth as much as Nvidia lost their value Tuesday. This evaporation of $279 billion is worth more than all the shares of some of the largest companies in America, including McDonald’s, Chevron and Pepsi.
CEO Jensen Huang, who is Nvidia’s largest individual shareholder (and fifth largest overall, counting institutional investors like BlackRock), personally lost $10 billion in wealth Tuesday from Nvidia’s collapse.
The company has fallen since June 18, when it was valued at $3.3 trillion — the highest for a public company. As the US economy begins to show some signs of stiffness, investors have grown skeptical of Nvidia and other AI stocks’ sky-high valuations. Stock traders worry that potential economic weakness could make companies think twice before investing in promising but still risky and unproven technologies.
Despite last week’s blockbuster earnings, Nvidia’s slightly more tepid outlook disappointed investors looking for a higher upside, and the stock fell.
Nvidia has fallen more than 20% since its June 18 peak. Microsoft, which has made big bets on AI technology, has fallen 12% from its most recent peak. And TSMC, Nvidia’s biggest AI chip-making rival, has fallen 18% since mid-July.
Meanwhile, Intel, once the world’s largest chipmaker, has seen its stock fall 59% this year. The company faces a unique challenge in reinventing itself and getting into the AI game.
Potential legal issues ahead
But Nvidia may be facing more trouble: Most of Tuesday’s sharp decline came as the U.S. Department of Justice reportedly served subpoenas as part of an antitrust investigation, according to Bloomberg. CNN could not verify the subpoena, and the Justice Department and Nvidia declined to comment directly on the antitrust investigation.
“Nvidia won on merit, as reflected in the benchmark results and value for customers, who can choose whichever solution is best for them,” an Nvidia spokesperson said in a statement.
The Biden administration has gone hard after tech titans, launching probes and lobbying allegations against Apple, Google and Amazon, among others. It’s unclear whether Kamala Harris or Donald Trump’s administration will pursue the case, but both criticized the tech company for various reasons during the campaign.
Nvidia gained about 1% Wednesday. The Nasdaq Composite, which rose more than 3% Tuesday, was unchanged Wednesday.
Still, AI bulls continue to believe in Nvidia. The stock remains up 118% this year and has a market value of $2.7 trillion – a close third behind Apple and Microsoft. Huang said last week that demand for the latest “Blackwell” AI chips “exceeds supply.” And even as competition increases, demand for Nvidia chips continues to grow.
And that investment is paying off — so far, at least — Huang claims.
“People who invest in Nvidia’s infrastructure immediately get a return,” Huang said last week, noting that the company’s new graphics processing unit, an AI-powered GPU chip, processes data efficiently to save clients money quickly. .
That’s why bulls like Wedbush’s Dan Ives believe the drop in Nvidia stock presents a buying opportunity.
“Nvidia has changed the technological and global landscape as GPUs have become the new oil and gold in the IT landscape,” Ives said Tuesday in a note to investors.
CNN’s Ramishah Maruf contributed to this report.
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