Extreme share price slump

Nvidia experiences stock market bloodbath: 279 billion dollars gone!

The AI hype propelled Nvidia's share price to astonishing heights - but now it seems to have come to a halt.

(Bild: APA/AP/Jeff Chiu)

The stock market value of AI chip manufacturer Nvidia plummeted by 279 billion dollars (253 billion euros) on Tuesday. Never before has a US company lost so much market value in one day. Observers saw this as a sign that investors are becoming more cautious about artificial intelligence (AI) technologies. AI has contributed significantly to the price gains on the US stock markets this year.

Last week, Nvidia presented a quarterly forecast that failed to meet investors' high expectations. Nvidia shares fell by 9.5 percent in a weak market environment. After the share price had mostly only known the upward direction in the wake of the AI hype since the beginning of 2023, the stock market value has multiplied since then and broke the three trillion dollar mark for the first time at the beginning of June. At this point, Nvidia had overtaken Apple and was only ahead of Microsoft.

Share price had almost tripled
Accordingly, a sharp percentage drop in Nvidia's share price is now reflected in three-digit billion dollar losses in its stock market value. Up to its record high in the middle of the year, Nvidia's share price had almost tripled in 2024. The last time there was a similarly high loss within one day was at the beginning of February 2022, when Facebook parent company Meta Platforms lost 232 billion dollars in stock market value following a weak forecast.

The PHLX chip index lost 7.75% on Tuesday. This was its sharpest daily fall since 2020. Concerns that the high level of investment in AI could only pay off slowly have weighed on the most valuable companies on Wall Street in recent weeks. Shares in Microsoft and Google parent Alphabet traded lower following their quarterly reports in July.

"So much money has flowed into technology and semiconductor stocks in the last twelve months that trading has been completely distorted," said Todd Sohn, ETF strategist at Strategas Securities. Experts at fund provider BlackRock wrote in a note to clients on Tuesday that some recent studies questioned whether the revenues from AI alone would justify the wave of investment in the technology.