Nvidia shares plummet, company loses $279 billion in market value

Nvidia shares plunged 9.5% on Tuesday, the biggest single-day decline in the market value of a U.S. company, weighed down by profit-taking by investors who have dampened optimism about artificial intelligence.

Nvidia lost $279 billion in market value in the session and the PHLX index of chip-related stocks plunged 7.75%, its biggest one-day drop since 2020.

The latest AI jitters come after Nvidia on Wednesday issued a quarterly outlook that missed the lofty investor expectations that had fueled a surge in its shares.

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“So much money has been poured into technology and semiconductors over the last 12 months that the trades are completely distorted,” said Todd Sohn, ETF strategist at Strategas Securities.

Concern also impacts other companies

Intel shares fell nearly 9% after Reuters reported that Chief Executive Pat Gelsinger and top executives are expected to unveil a plan to cut costs and revamp investments.

Concerns about slow returns on big investments in AI have dogged Wall Street’s most valuable companies in recent weeks, with shares of Microsoft Corp. and Alphabet Inc. trading lower after reporting second-quarter results in July.

“Some recent research has questioned whether AI revenues alone will ultimately justify this surge in AI investment. When evaluating AI investment by individual companies, investors should consider whether they are making the best use of their resources,” BlackRock strategists wrote in a note Tuesday.

Nvidia’s drop is record

At the end of July, Nvidia’s market value was nearly three times higher than it was at the end of 2023. Recent losses in the stock’s value have reduced its year-to-date gain to 118%.

Nvidia’s record loss yesterday dwarfed the $232 billion writedown suffered by Meta on Feb. 3, 2022, when the social media company issued a dismal performance forecast, according to Lseg data.

Following Nvidia’s quarterly report last week, analysts’ average estimate for annual net income through January 2025 rose to $70.35 billion from about $68 billion before the numbers were released.

That increase in estimates, combined with Nvidia’s share price losses, leaves the chipmaker now trading at 34 times expected earnings, down from more than 40 times earnings in June and in line with its two-year average.