Nvidia's Stock Plummets 9 Per Cent, Wiping Out $280 Billion In Market Cap. Here's Why

Nvidia share price: Nvidia, which is Nasdaq-listed, saw its stock valuation decrease by $279 billion, or 9.5 per cent, as a result of the sell-off

Nvidia Share Price: The company is now trading at 34 times expected earnings, down from over 40 in June, aligning with its two-year average.

Source : Nvidia

Nvidia share price: Financial markets in both Asia and the United States tumbled this week as growing concerns over a potential US recession took hold. Shares in American chip giant Nvidia led the downturn, dropping by almost 10 per cent after the US Justice Department issued subpoenas to the company and other firms, escalating an investigation into possible antitrust violations related to the dominant position of AI processors. Shares of Nvidia closed at $108.00 apiece, down 9.53 per cent on the NASDAQ on Tuesday.

The sell-off began on Tuesday, with Nvidia losing $279 billion in market capitalisation — a significant indicator that investor enthusiasm for AI technology is waning amidst broader economic worries. This loss eclipsed the $232 billion decline previously seen by Meta Platforms, owner of Facebook, in February 2022 when the social media giant issued a bleak forecast.

Nvidia, which is Nasdaq-listed, saw its stock valuation decrease by $279 billion, or 9.5 per cent, as a result of the sell-off. This dramatic one-session loss reflects broader concerns about the sustainability of the AI-driven rally that has characterised much of the year's stock market performance.

Other major US tech companies, including Alphabet, Apple, and Microsoft, also saw their shares fall significantly, contributing to the overall market decline.

Despite the recent downturn, Nvidia's quarterly report last week prompted analysts to raise their estimates for the company’s annual net income through January 2025 to $70.35 billion, up from $68 billion. However, with Nvidia's share price losses, the company is now trading at 34 times expected earnings, down from over 40 in June, aligning with its two-year average.

The downward trend continued into Wednesday as major Asian markets mirrored the sharp declines seen in New York. Japan's Nikkei 225 fell by 3.3 per cent, South Korea's Kospi dropped 2.7 per cent, and Hong Kong's Hang Seng slipped 0.7 per cent.

Investor sentiment has grown increasingly cautious in response to new data showing that US manufacturing activity remains subdued. With key employment figures due on Friday, market participants are bracing for further volatility.

In Asia, major technology firms such as TSMC, Samsung Electronics, SK Hynix, and Tokyo Electron also experienced sharp declines, highlighting the global impact of the economic uncertainty and the shifting investor sentiment towards technology stocks.