Nvidia, the AI chipmaking titan that was briefly the world’s most valuable company, suddenly found itself in an unfamiliar position: a major rut.
Nvidia (NVDA) had its worst day in stock market history on Tuesday, in terms of total market value loss. The 9.5% share price drop reduced the company’s value by $279 billion, far surpassing the previous record of $240 billion set by Meta in 2022.
To put this shocking drop in perspective, only 27 companies on the planet are worth as much as Nvidia’s loss of value on Tuesday. That $279 billion loss is worth more than all the shares of some of America’s largest companies, 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 on Tuesday because of Nvidia’s sharp decline.
The company has been in decline since June 18, when it hit $3.3 trillion in value, the highest level ever for a publicly traded company. As the U.S. economy begins to show signs of stress, investors are increasingly skeptical of the sky-high valuations of Nvidia and other AI stocks. Traders worry that a potential weakness in the economy could make companies think twice about investing in the promising but still risky and unproven technology.
Despite stellar results last week, Nvidia’s somewhat tepid outlook disappointed investors looking for more upside, and the stock fell.
Nvidia has fallen more than 20% since its June 18 peak. Microsoft, which has made big bets on artificial intelligence technology, is down 12% from its most recent peak. And TSMC, Nvidia’s biggest rival in AI chipmaking, has plunged 18% since mid-July.
Meanwhile, Intel, once the world’s largest chipmaker, has suffered a 59% share price decline this year. The company faces challenges of its own as it tries to reinvent itself and enter the artificial intelligence space.
Potential Legal Issues
But Nvidia could face another set of problems: The government could investigate it for potential antitrust violations.
According to Bloomberg, Tuesday’s sharp decline was largely due to the U.S. Justice Department reportedly serving it a subpoena as part of an antitrust investigation. CNN was unable to independently verify the subpoena, and the Justice Department declined to comment directly on a potential antitrust investigation.
Nvidia said Wednesday afternoon that it had not received a subpoena from the Justice Department.
“We have investigated with the U.S. Department of Justice and have not been subpoenaed,” an Nvidia spokesperson said in a statement. “Nevertheless, we are happy to answer any questions regulators may have about our business.”
The Biden administration has gone after tech giants, launching investigations and filing lawsuits against Apple, Google and Amazon, among others. It’s unclear whether a Kamala Harris or Donald Trump administration would pursue those lawsuits, but both criticized tech companies for various reasons during their campaigns.
Nvidia fell another 1.7% on Wednesday. The Nasdaq Composite, which had lost more than 3% on Tuesday, lost 0.3% on Wednesday.
AI proponents, however, continue to believe in Nvidia. The stock is up 118% this year and has a market valuation of $2.7 trillion, a third as large as Apple and Microsoft. Huang said last week that demand for its latest “Blackwell” AI chips “far outstrips supply.” And even as competition heats up, demand for Nvidia’s chips is also growing.
And the investments are paying off – at least so far – Huang says.
“People who invest in Nvidia infrastructure see immediate benefits,” Huang said last week, noting that the company’s new graphics processing units, the GPU chips that power AI, process data so efficiently that they end up saving customers money quickly.
That’s why bulls like Wedbush’s Dan Ives believe Nvidia’s share decline presents a buying opportunity.
“Nvidia has changed the technology and global landscape as its GPUs have become the new oil and gold of the computing landscape,” Ives said in a note to investors Tuesday.
CNN’s Ramishah Maruf contributed to this report.
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