NVIDIA, a leading force in AI semiconductors, faced a significant setback on Tuesday, with its stock plummeting nearly 10%.
The drop occurred despite the absence of a clear catalyst. Analysts speculate that the sharp recent rise in NVIDIA’s stock price and concerns over potential delays in the shipment of its next-generation AI semiconductor, Blackwell, may have triggered panic selling among investors. Additionally, broader market uncertainties, particularly fears of a potential U.S. recession, contributed to the decline.
On Tuesday, NVIDIA’s stock closed at $108.00, a decrease of $11.37, or 9.53%, from the previous weekend. Intraday, the stock briefly recovered to $116.21, a drop of $3.16, or 2.65%, but ultimately finished the day with a near 10% decline. The day’s market cap loss totaled $27.89 billion.
This loss in market value surpasses Chevron’s market cap of $26.25 billion, making it more significant than one of the major U.S. oil companies. The lost value is also comparable to Netflix’s market cap of $28.98 billion, positioning it as the 33rd largest globally.
Based on market capitalization, NVIDIA’s loss ranks as the 34th largest in the world, just behind Netflix. Nestlé, which previously held the 34th position, has a market cap of $27.65 billion, slightly below NVIDIA’s lost value.
NVIDIA’s stock surged over 150% this year, setting the stage for the abrupt decline. Analysts suggest that the recent rotation of investor interest into other stocks may have diminished NVIDIA’s appeal, prompting widespread selling.
Despite the downturn, experts remain optimistic. Bank of America (BofA) raised its target price for NVIDIA from $150 to $165 at the end of August, and Wall Street analysts continue to recommend buy positions. I/O Fund senior tech analyst Beth Kindig expressed confidence in an interview with Yahoo Finance, predicting that NVIDIA’s market cap could exceed $10 trillion, more than triple its current value.
Analysts believe Blackwell’s shipment delays will not have a lasting impact. With Hopper Semiconductors addressing the interim needs, they expect NVIDIA’s revenue to rebound once Blackwell is delivered.
In related news, Tesla CEO Elon Musk announced on social media that his AI startup, xAI, has successfully launched its Colossus AI training infrastructure, featuring 100,000 NVIDIA H100 semiconductors. Musk indicated that xAI will soon unveil “the world’s most powerful AI training system,” incorporating the forthcoming H200 Blackwell semiconductors.
