Nvidia's Market Value Drops By $400 Bn In One Week

The world’s largest AI chipmaker Nvidia saw its market value decrease by USD 406 billion this week as concerns about the health of the US economy and the sustainability of the AI boom rattled investors. 

The company’s stock has shed a fifth of its value over the past two weeks, marking its worst two-week stretch in two years. This sharp decline has made Nvidia one of the most volatile stocks in the market, with fluctuations in its share price now eclipsing those of its peers in the Magnificent Seven and even cryptocurrency Bitcoin.

Nvidia’s shares have swung between USD 90.69 and USD 131.26 over the past 30 trading days, pushing its 30-day realised volatility to around 80—roughly four times that of Microsoft and double Bitcoin’s figure. 

The company’s volatility now rivals meme stocks like Tesla Inc. and Donald Trump’s media venture. The selloff has been fueled by several factors, including a lukewarm revenue forecast, technical issues with Nvidia’s upcoming Blackwell chip, and the escalation of an antitrust investigation by the US Department of Justice.

Adding to the broader unease in the chipmaking sector, Broadcom Inc. recently issued a disappointing sales forecast, deepening concerns about the industry's outlook. Despite the setback, Nvidia remains a strong performer overall, with its stock still up more than 100 per cent in 2024, adding USD 1.3 trillion in value. 

Wall Street analysts continue to see long-term potential for Nvidia as major clients like Microsoft, Meta, Alphabet, and Amazon affirm their commitment to AI infrastructure spending, which accounts for over 40 per cent of Nvidia’s revenue.

While Nvidia’s revenue and earnings exceeded expectations last week, the results fell short of the high-end estimates that had fueled investor euphoria earlier in the year. The tempered outlook has raised questions about the longevity of AI-driven spending, causing a pause in the company’s meteoric rise. 

(Inputs from Bloomberg)