Nvidia’s unprecedented market value shift

Category: AI Americas

Nvidia, the renowned chipmaker, witnessed a significant drop in its market value. The company’s shares plummeted by 16 percent since last Thursday, resulting in a staggering loss of over $550 billion in market value. This drastic fall ended Nvidia’s brief reign as the world’s most valuable company.

Nvidia’s journey to the top was nothing short of remarkable. The company’s market value soared to an impressive $2.91 trillion, surpassing tech giants Microsoft and Apple. However, this victory was short-lived as Nvidia’s market value took a hit, dropping by approximately $550 billion from its peak. The company, which was once at the pinnacle, has now slipped to the third position.

Nvidia’s gains were instrumental in driving the S&P 500’s increase in 2024. The company accounted for roughly a third of the S&P 500’s rise. However, with Nvidia’s shares now down about 16 percent from its intraday high of $140.76 last Thursday, concerns about its influence on the broader index have grown. Some analysts have cautioned that a significant sell-off for Nvidia could trigger a wider market slump.

CEO’s share sale

Adding to the company’s woes, it was revealed that Nvidia’s CEO and co-founder, Jensen Huang, sold nearly $95 million worth of shares around the time when Nvidia became the world’s most valuable company. These trades were part of a pre-scheduled Rule 10b5-1 sale plan established in March.

The rapid rise and subsequent fall of Nvidia’s stock have drawn comparisons with Cisco, the networking equipment manufacturer that briefly held the title of the world’s most valuable company during the dotcom boom in March 2000. Much like Nvidia, Cisco experienced a significant loss in value when the bubble burst.

Nvidia’s downturn has had a ripple effect on the broader chipmaking sector, with the PHLX Semiconductor Index falling nearly 7 percent over the past three trading sessions. The tech-heavy Nasdaq Composite also fell by 1.1% on Monday. Despite gains in most sectors, the blue-chip S&P 500 closed 0.3 percent lower, largely due to Nvidia’s decline.

Despite the gloomy outlook, some market experts view Nvidia’s sell-off as a positive development for the market. Manish Kabra, head of US equity strategy at Société Générale, believes that this could either lead to a broader market rally or prevent the formation of a tech stock bubble. Only time will tell what lies ahead for Nvidia and the global market.

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