Nvidia Market Value Hit By Historic Single-Day Drop

Nvidia shares recovered somewhat in early US trading on Wednesday after recording the biggest one-day market capitalisation drop in US history on Tuesday.

The comapny’s shares rose about 1 percent on Wednesday morning after closing 9.5 percent lower on Tuesday.

Apple, Microsoft, Google and other tech companies also traded lower on Tuesday. Apple and Microsoft continued in the doldrums early on Wednesday, while Google parent Alphabet rose slightly.

Nvidia’s Tuesday drop saw its market capitalisation fall by $270 billion (£205bn), the biggest one-day drop on record for a US company.

Record drop

The decline was larger in value than the entirety of some of the US’ biggest companies, including McDonald’s Chevron and Pepsi.

For comparison, Netflix is currently worth some $292bn.

The previous record drop of $240bn was set by Meta in 2022.

Jensen Huang, Nvidia’s chief executive and largest shareholder, saw his personal wealth decline by $9.9bn on Tuesday, taking him out of the select group of people with more than $100bn in wealth.

Huang’s fortune sank from nearly $105bn to about $94.9bn, according to the Bloomberg Billionaires Index, moving him to 18th place behind Indian industrialist Gautam Adani and the three surviving children of Walmart founder Sam Walton.

The $100bn club includes figures such as Elon Musk, Jeff Bezos and Warren Buffet.

Subpoena

After the markets closed, Bloomberg reported that Nvidia had been served with a subpoena from the US Department of Justice over possible antitrust violations, contributing to further declines in after-hours trading.

Following its second-quarter results in August, Nvidia’s shares sank 6 percent after it projected more modest growth going forward.

The company’s shares are still worth nine times what they were in November 2022, when OpenAI spurred the current AI boom with the launch of ChatGPT.

“Nvidia has changed the tech and global landscape as its GPUs have become the new oil and gold in the IT landscape,” said Wedbush analyst Dan Ives, arguing the price drop was a buying opportunity.

AI scepticism

The AI chipmaker’s share slump came amidst wider declines in US tech stocks that dragged down markets in Asia and Europe.

Investors were moved to caution by a range of factors, including subdued US manufacturing figures and an 11.1 percent month-on-month decline in worldwide semiconductor sales for July, which weighed on chipmakers in particular, industry watchers said.

Such factors have brought in a new tone of scepticism around the valuations of companies whose shares have skyrocketed over the past two years, largely on speculation around generative AI.

On 18 June Nvidia rose to over $3.3tn in value, making it the biggest listed US company, following months of focus on the company’s AI-fuelled prospects.

It is currently valued at roughly $2.67tn.