Nvidia has lost $500 billion in market value since it briefly became the world’s most valuable company last week, with its shares falling 5 percent on Monday.
Nvidia, whose earnings alone account for about a third of the S&P 500’s rise in 2024, fell 5.9 percent to $118.89 in late morning trading in New York, 15.1 percent below its intraday high of $140.76 hit last Thursday.
Nvidia’s market value fell to $2.96 trillion on Monday, down about $500 billion from Thursday’s peak. Earlier last week, the company overtook Microsoft and Apple to become the world’s most valuable publicly traded company, but has since fallen back to third place.
Concerns about Nvidia’s impact on the broader index – the stock is up 140 percent so far through 2024 – have intensified in recent weeks, with some analysts warning that a big enough sell-off at the chipmaker could trigger a broader market collapse.
“If Nvidia corrects pretty sharply in the coming months, it’s going to be very difficult for the (S&P 500) to continue to rise,” said Barry Bannister, chief equity strategist at Stifel. “And Nvidia is going to slow down,” he added, pointing to the company’s strong earnings growth to date.
Monday’s decline follows revelations Friday that the chipmaker’s chief executive and co-founder, Jensen Huang, sold nearly $95 million worth of stock in the days just before and after the company became the world’s most valuable. The transactions were part of a previously planned Rule 10b5-1 sale plan launched in March, filings show.
Nvidia declined to comment on the sales.
The stock’s rapid rise prompted some skeptical observers to compare it to Cisco, the networking equipment maker that briefly became the world’s most valuable company at the height of the dot-com boom in March 2000. The following year, Cisco lost about 80 percent of its value when the bubble burst and telecommunications companies drastically cut spending on broadband infrastructure.
The turnaround at Nvidia has weighed on the entire chip manufacturing sector. The PHLX Semiconductor Index has fallen 6 percent since Thursday. The technology-dominated Nasdaq Composite was 0.3 percent lower in midday trading in New York.
The broader stock market, on the other hand, was unscathed by Nvidia’s decline: The blue-chip S&P 500 index rose 0.3 percent, and the small-cap Russell 2000 index, which had performed significantly worse than the large-cap indices in recent months, rose 0.8 percent.
Manish Kabra, head of U.S. equity strategy at Société Générale, said Nvidia’s sell-off on Monday was “an extremely healthy development for the market.”
“Either the market rally will expand or a bubble (in technology stocks) will form that does not yet exist,” Kabra said.
