Nvidia shares have dropped 14% over the past three sessions following earnings that fell short of high expectations. While the stock had nearly tripled in 2024, reaching a record high in July, the recent decline still leaves it up 118% year-to-date (YTD).
Nvidia’s share price plummets over 9%, experiencing a record $279 billion loss in market value.
Nvidia shares have dropped 14% over three sessions following earnings reports that fell short of high expectations. Despite reaching a record high in July, where the stock price nearly tripled in 2024, recent declines still leave the stock up 118% year-to-date.
On Tuesday, Nvidia’s stock price plunged almost 10%, marking the largest single-day decline in market value for a U.S. company, as investor enthusiasm for artificial intelligence (AI) showed signs of waning. The AI giant’s shares fell 9.5% to $108 each, wiping out $279 billion in market capitalization, according to Reuters. This massive loss highlights growing investor caution around the emerging AI technology that has driven much of this year’s stock market gains.
Nvidia’s record-breaking one-day market capitalization loss surpassed the $232 billion drop experienced by Meta Platforms on February 3, 2022, when the social media giant issued a bleak forecast, according to data from LSEG, Reuters reported.
Nvidia Valuations
Following the company’s quarterly earnings report last week, the average analyst estimate for Nvidia’s annual net income through January 2025 increased to $70.35 billion from around $68 billion prior to the report. Despite the boost in earnings estimates, Nvidia’s stock is now trading at 34 times expected earnings, down from over 40 in June and aligning with its two-year average, as per Reuters.
Tuesday also saw a broader market selloff, particularly in technology stocks, following weak economic data. The PHLX chip index plunged 7.75%, its biggest single-day drop since 2020. Meanwhile, the Nasdaq fell 3.3%, and the S&P 500 declined 2.1%.
In a related development, Bloomberg News reported that the U.S. Department of Justice has subpoenaed Nvidia as part of an expanding antitrust investigation. Previously, the antitrust watchdog had issued questionnaires and has now sent legally binding requests to Nvidia, according to sources familiar with the matter. The investigation concerns allegations that Nvidia is making it difficult to switch to other suppliers and penalizing customers who don’t exclusively use its AI chips.
“Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them,” a company spokesperson stated.
