CNN
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Nvidia, the titan of AI chip manufacturing that was briefly the most valuable company in the world, suddenly finds itself in an unfamiliar situation: a deep crisis.
Nvidia (NVDA) had its worst day in stock market history on Tuesday in terms of loss of total market value. The 9.5% drop wiped a staggering $279 billion off the company’s value, far surpassing the previous record of $240 billion set by Meta in 2022.
To put this shocking drop in context, only 27 companies in the world are worth as much as Nvidia lost in value on Tuesday. That $279 billion loss is worth more than all the stocks of some of America’s largest companies, including McDonald’s, Chevron and Pepsi.
CEO Jensen Huang, Nvidia’s largest individual shareholder (and the fifth largest overall if institutional investors such as BlackRock are included), personally lost ten billion dollars in wealth on Tuesday due to Nvidia’s sharp decline.
The company has been on the decline since June 18, when it was valued at $3.3 trillion – the highest of any publicly traded company. As the U.S. economy begins to show signs of weakness, investors have become skeptical about the astronomical valuations of Nvidia and other AI stocks. Stock traders fear that a potential weakness in the economy could make companies think twice before investing in the promising but still risky and unproven technology.
Despite last week’s stellar earnings, Nvidia’s more measured outlook disappointed investors who had expected more upside, and the stock fell.
Nvidia has fallen more than 20 percent since its June 18 peak. Microsoft, which has bet heavily on AI technology, has fallen 12 percent since its recent peak. And TSMC, Nvidia’s biggest competitor in AI chips, has slumped 18 percent since mid-July.
Intel, once the world’s largest chipmaker, has seen its share price fall 59 percent this year. The company faces its own challenges as it tries to reposition itself and enter the AI market.
However, Nvidia could face a number of other problems: Tuesday’s sharp drop was largely due to the U.S. Department of Justice reportedly sending the company a subpoena as part of an antitrust investigation, according to Bloomberg. CNN could not independently verify the subpoena, and the Justice Department and Nvidia declined to comment directly on the antitrust investigation.
“Nvidia wins on merit, as reflected in our benchmark results and the value to customers who can choose the solution that is best for them,” an Nvidia spokesperson said in a statement.
The Biden administration is cracking down on tech giants, launching investigations and filing charges against Apple, Google and Amazon. It is unclear whether a Kamala Harris or Donald Trump administration would continue these proceedings, but both criticized tech companies for various reasons during the campaign.
Nvidia fell another 2% in premarket trading on Wednesday, dragging the entire technology sector further lower. The Nasdaq Composite, which fell more than 3% on Tuesday, lost another 0.7% in premarket trading on Wednesday.
Still, AI bulls continue to believe in Nvidia. The stock is up 118% this year and has a market valuation of $2.7 trillion – just behind Apple and Microsoft. Huang said last week that demand for its latest “Blackwell” AI chips “far exceeds supply.” And even as competition increases, so does demand for Nvidia’s chips.
And the investments are paying off – at least so far – says Huang.
“Anyone who invests in Nvidia’s infrastructure will get an immediate return,” Huang said last week, pointing out that the company’s new graphics processors – the GPU chips that power AI – process data so efficiently that they quickly end up saving customers money.
That’s why bulls like Wedbush’s Dan Ives believe the drop in Nvidia stock represents a buying opportunity.
“Nvidia has changed the technology and world landscape as its GPUs have become the new oil and gold in the IT landscape,” Ives said in a note to investors on Tuesday.
