NVIDIA's market value plummets by $406 billion amid economic concerns
What's the story
NVIDIA, the world's leading artificial intelligence (AI) chipmaker, has experienced a significant loss in its market value.
The company's worth plummeted by approximately $406 billion this week, due to growing concerns about the US economy.
This substantial decrease represents a fifth of NVIDIA's total value over the past fortnight.
The recent downturn has highlighted the company's high level of volatility, which now exceeds that of its main competitors, known as the Magnificent Seven (includes Meta, Alphabet, Amazon, and Apple).
Market fluctuations
NVIDIA's volatility surpasses that of Bitcoin
Over the past month, NVIDIA shares have fluctuated between $90.69 and $131.26, with a record amount of market value being wiped out on Tuesday alone.
This high level of instability drove its 30-day realized volatility up to about 80 — around four times the level of Microsoft, double Bitcoin's figure and higher than meme stocks like Donald Trump's media company, and Elon Musk's Tesla.
Market challenges
Factors contributing to market value decline
The recent downturn in NVIDIA's shares marks the company's worst two-week performance in two years, according to data compiled by Bloomberg.
This decline was triggered by a lukewarm forecast and issues with its Blackwell chip, which dampened investor enthusiasm.
The situation was further exacerbated when the US Justice Department issued subpoenas as part of an intensifying antitrust investigation.
Additionally, a disappointing sales forecast from Broadcom added to the overall pessimism surrounding chipmakers.
Stock performance
Shares still up despite recent slide
Despite the recent downturn, NVIDIA's shares have still managed to increase by over 100% in 2024, adding $1.3 trillion in market value.
Wall Street analysts continue to view NVIDIA as well-positioned for future growth as companies invest in AI-related infrastructure.
This optimistic outlook is supported by the company's major clients — Microsoft, Meta, Alphabet, and Amazon — who collectively account for more than 40% of NVIDIA's revenue and have confirmed their spending plans for upcoming quarters.
Financial outlook
NVIDIA's revenue surpasses expectations
Despite the market challenges, NVIDIA's recent financial results have exceeded expectations.
The company's revenue more than doubled and outperformed predictions, as did adjusted earnings.
However, the company's revenue forecast fell short of the high end of estimates, disappointing some market participants who had become accustomed to exceptional reports from NVIDIA.
This has led to skepticism among those uncertain about the long-term prospects for AI spending.