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Why are Nvidia shares falling? An 8% decline at noon destroys $277 billion

Posted on by Dsen .N

Top line

Nvidia shares suffered a rare decline on Thursday, briefly relinquishing the AI ​​engine’s title as the world’s most valuable public company and showing the sensitivity of broader stock indexes to Nvidia’s price changes.

Key facts

Nvidia shares fell as much as 8% from an all-time high in the early morning hours to an afternoon low, and the stock price fell 3.5% intraday to $131 at the end of the day, reversing a gain of as much as 4% shortly after Thursday’s open session .

Intraday swings resulted in a $277 billion loss in Nvidia’s market value, which fell to $3.27 trillion, putting Nvidia behind MIcrosoft after surpassing the more established technology company’s market capitalization on Tuesday.

There was no clear catalyst for Nvidia’s sell-off, indicating that it was likely a matter of investors taking profits after the company’s shares rose 170% year-to-date and 800% since the beginning of last year.

Nvidia shares are up 40% in the last month alone.

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Why are stocks falling today?

Most importantly, Thursday’s decline showed the broader market’s sensitivity to Nvidia’s stock performance, as around 1:45 p.m. the S&P 500 Index rose from its early morning peak to a 0.3% gain to a 0.6% loss, with almost all of the decline explained by Nvidia. Essentially, Nvidia’s intraday decline wiped out the index’s equivalent of Coca-Cola, the 27th most valuable company according to S&P, which has a market capitalization of about $270 billion.

Key background

It’s completely normal for a stock to drop in value after a meteoric rise like Nvidia’s. Broad index funds benefited far more from Nvidia’s inclusion than they suffered, and Nvidia’s added market cap in 2024 is $2 trillion, one-third of the S&P’s 15% market-cap-weighted gain year-to-date. Nvidia, which produces much of the semiconductor technology most in demand for generative artificial intelligence applications, saw profits jump sixfold in the last quarter as customers such as Microsoft and Google rushed to the technology.

Big number

$345,000. That’s roughly what $10,000 invested in Nvidia exactly five years ago would be worth today. The same amount invested in the S&P will be worth about $20,150.

Further reading

ForbesNvidia – The most valuable company in the world – gains another 3%, and the valuation is already at $4 trillionBy Derek Saul
ForbesThese 10 Nvidia shareholders became $36 billion richer in one monthBy Phoebe Liu