Nvidia is suddenly in trouble

Nvidia, the AI ​​chip giant that was briefly the world’s most valuable company, suddenly finds itself in an unfamiliar situation: a major low.

Nvidia (NVDA) had the worst day in stock market history on Tuesday, as measured by loss in total market value. The 9.5% drop in stock price sliced ​​a staggering $279 billion off the company’s value, far surpassing the previous record of $240 billion set by Meta in 2022.

To put that shocking drop in context, only 27 companies on the planet are worth as much as Nvidia lost in value on Tuesday. That $279 billion in evaporation is worth more than all the shares of some of America’s largest corporations, including McDonald’s, Chevron and Pepsi.

CEO Jensen Huang, Nvidia’s largest individual shareholder (and the fifth-largest overall, if you count institutional investors like BlackRock), personally lost $10 billion in wealth on Tuesday as Nvidia’s share price plummeted.

The company has been in decline since June 18, when it surpassed $3.3 trillion in value — the highest for a publicly traded company. As the U.S. economy begins to show signs of stress, investors have grown skeptical of the lofty valuations of Nvidia and other AI stocks. Stock traders worry that potential weakness in the economy could make companies think twice about investing in the promising but still risky and unproven technology.

Despite last week’s huge earnings, Nvidia’s somewhat less positive outlook disappointed investors looking for more upside potential. The stock price fell.

Nvidia has fallen more than 20% from its June 18 peak. Microsoft, which has been betting big on AI technology, is down 12% from its most recent peak. And TSMC, Nvidia’s biggest AI chipmaker, is down 18% since mid-July.

Meanwhile, Intel, once the world’s largest chipmaker, has suffered a 59% drop in its stock price this year. The company faces its own unique challenges as it tries to reinvent itself and get into the AI ​​game.

Possible legal issues in the future

But Nvidia could be facing other problems: Much of Tuesday’s sharp decline came after the U.S. Justice Department reportedly sent it a subpoena as part of an antitrust investigation, Bloomberg reported. CNN was unable to independently verify the subpoena, and the Justice Department and Nvidia declined to comment directly on the antitrust probe.

“Nvidia wins on merit, as demonstrated by our benchmark results and the value to customers, who can choose the solution that best suits their needs,” an Nvidia spokesperson said in a statement.

The Biden administration has gone after tech giants hard, launching investigations and filing charges against Apple, Google, and Amazon, among others. It’s unclear whether a Kamala Harris or Donald Trump administration would pursue these cases, but both criticized tech companies for different reasons during their campaigns.

The story continues

Nvidia fell another 2% in premarket trading on Wednesday, continuing to drag down the broader tech sector. The Nasdaq Composite, which fell more than 3% on Tuesday, fell another 0.7% in premarket trading on Wednesday.

Still, AI bulls continue to believe in Nvidia. The stock is up 118% this year and has a market value of $2.7 trillion — a close third behind Apple and Microsoft. Huang said last week that demand for its latest “Blackwell” AI chips “far outstrips supply.” And even as competition heats up, demand for Nvidia’s chips is growing too.

And the investments are paying off, at least so far, Huang claims.

“People who invest in Nvidia’s infrastructure are getting an immediate return on their investment,” Huang said last week, noting that the company’s new graphics processing units, the GPU chips that power AI, process data so efficiently that they’re quickly saving customers money.

That’s why optimistic people like Wedbush’s Dan Ives believe Nvidia’s share price drop presents a buying opportunity.

“Nvidia has changed the technology and the global landscape as its GPUs have become the new oil and gold in the IT landscape,” Ives said in a note to investors on Tuesday.

CNN’s Ramishah Maruf contributed to this report.

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