Opinion
Mint Quick Edit | AI chip-maker Nvidia’s share crash is a reality check
Summary
- On Tuesday, Nvidia’s stock crashed 9.5%, wiping out close to $300 billion in market value, after it was served a subpoena by the US Department of Justice. But then, its spectacular upshoot since early 2023 seemed driven by AI overhype.
Share prices around the world slumped on Wednesday after an overnight drop in US markets led by Nvidia. Stock markets from London to Frankfurt and Tokyo all traded in the red as concerns grew of global growth weakening after a subdued US manufacturing report.
On Tuesday, Nvidia shares were battered on a news report of the chip-maker being served a subpoena by the US Department of Justice amid a probe of its alleged monopoly abuses. It crashed 9.5%, wiping out close to $300 billion in market value, the biggest-ever single-day loss for any US firm.
Nvidia’s quarterly earnings reported just days ago had also failed to impress. That said, its shares still are up about 120% year-to-date, given surging demand for its high-end chips used for artificial intelligence (AI) applications.
Also read: Nvidia share price tanks over 9%, suffers record $279 billion rout in market value
The explosive growth in the company’s market capitalization from about $350 billion at the start of 2023 to some $3 trillion recently underscores the central role Nvidia is seen to play in global AI adoption.
This week’s correction suggests that reality is catching up with expectations. India got off the chip-making block late. While we have taken some early steps, there is much ground to cover.
