Nvidia, the US-based Chip maker's shares fell to 9.5 per cent on Tuesday, which is the deepest ever single-day decline in market value for the company in the US.
Nvidia lost $279 billion in market capitalization, which shows that investors are becoming weary of the upcoming AI technology that has stoked up much of this year's stock market gains.
Last week, the company announced that its revenue for second quarter of 2024 reported doubled compared to previous year, achieving a record $30 billion.
Here’s why Nvidia shares fell over 9 per cent on Tuesday:
According to a Wall Street Journal report last week, Apple Inc and Nvidia are joining hands for the OpenAI funding round, that will see the artificial intelligence company’s valuation go over $1 billion. Microsoft is also a major investor in AI technology.
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The US-based chipmaker has been a key supplier of AI chips for companies across the globe. It is the supplier of OpenAI’s foundation model.
In the previous quarters, there has been a lot of scrutiny around AI and its future trajectory. According to market analysts, AI space demands massive capital in the present, which could impact their bottom-line as it may take a while for those investments to reflect in financial results.
The development comes after Nvidia, last Wednesday, gave a quarterly outlook that failed to meet the high expectations of investors who have driven a dizzying rally in its stock.
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In recent weeks, concerns over the slow returns from huge AI investments have impacted Wall Street's most valuable companies. Even Microsoft and Alphabet are trading lower following their quarterly results.
Chipmaker Intel reportedly dropped nearly 9 per cent after Reuters reported that CEO Pat Gelsinger and key executives are expected to present a plan to the company's board of directors to slice off unnecessary businesses and revamp capital spending at the struggling chipmaker.
This has led to a decline on Wall Street with the Nasdaq dropping 3.3 per cent and the S&P 500 down 2.1 per cent
The PHLX chip index plummeted to 7.75 per cent its biggest one-day drop since 2020.
The chip index is now up 14 per cent in 2024, just under the S&P 500's 16 per cent gain.
At its July record-high close, Nvidia had almost tripled in 2024. Its recent losses leave it 118 per cent higher on year-to-date.
Following Nvidia's quarterly report last week, the mean analyst for the annual net income through January 2025 has climbed to $70.35 billion from $68 billion ahead of last week's report.
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