Nvidia share price tanks over 9%, suffers record $279 billion rout in market value

Nvidia stock price plunged nearly 10% on Tuesday, witnessing the biggest ever single-day decline in market value for a US company, as investors’ optimism about artificial intelligence seem to be weakening.

The AI heavyweight Nvidia shares tumbled 9.5% to $108 apiece on Tuesday and lost $279 billion in market capitalization, Reuters reported. This was the largest ever single-day fall in market value for a US company, indicating that investors are becoming more cautious about emerging AI technology that has fueled much of this year’s stock market gains.

Nvidia shares have fallen 14% in the three sessions since it reported earnings that failed to meet lofty expectations. Nvidia stock price had almost tripled in 2024 at its record high close in July. However, the recent losses in the stock leave it up 118% year to date (YTD).

Nvidia’s record one-session loss in market capitalisation was greater than the $232 billion decline suffered by Facebook-owner Meta Platforms on February 3, 2022, when the social media company issued a dismal forecast, according to LSEG data, Reuters reported.

Nvidia valuations

After Nvidia reported its quarterly earnings last week, the mean analyst estimate for annual net income through January 2025 has climbed to $70.35 billion from about $68 billion ahead of last week’s report.

The increased earnings estimates along with the losses in Nvidia share price, have the chipmaker now trading at 34 times expected earnings, down from over 40 in June and in line with its two-year average, Reuters reported.

A selloff was also witnessed in broader markets and other technology stocks on Tuesday following tepid economic data. The PHLX chip index plummeted 7.75%, its biggest one-day drop since 2020.

The session’s weakness in chip stocks accompanied wide declines on Wall Street, with the Nasdaq dropping 3.3% and the S&P 500 down 2.1%.

In a separate development, Bloomberg News reported on Tuesday that the US Department of Justice has sent a subpoena to Nvidia as it deepens its probe into the company’s antitrust practices.

The antitrust watchdog had previously delivered questionnaires, and has now sent legally binding requests to Nvidia, the report said citing people familiar with the investigation. It added that other companies had also received subpoenas.

Officials are concerned that the chipmaker is making it harder to switch to other suppliers and penalizes buyers that do not exclusively use its artificial intelligence chips, the report said.

“Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them,” a spokesperson for the company said.

(With inputs from Reuters)