London
CNN
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Nvidia has lost its briefly worn crown as the world’s most valuable publicly traded company after its share price plunged nearly 13% last week.
The US chipmaker’s market cap reached $3.34 trillion on June 18, surpassing that of Microsoft, but has lost $430 billion since then. With a current value of $2.91 trillion, Nvidia has fallen to third place globally, behind Microsoft (MSFT) and Apple (AAPL), which have market caps of $3.33 trillion and $3.19 trillion, respectively.
Nvidia (NVDA) shares fell 6.7 percent on Monday, marking the third straight day of losses and suggesting that investor enthusiasm about the company’s crucial role in the artificial intelligence revolution may be waning following stunning gains in its stock price.
“Although we believe in AI, there have been signs of exuberance in the U.S. market over the past month,” Jim Reid, a research strategist at Deutsche Bank, wrote in a note on Monday.
On Tuesday, Nvidia shares rose more than 5%, reversing course after a multi-day sell-off.
Nvidia shares have risen nearly 139% in the past year. The company’s chips power AI systems, including generative AI, the technology behind OpenAI’s ChatGPT, which can create text, images and other media.
“With Nvidia, we are seeing the typical volatility that is to be expected when a stock rises as quickly as Nvidia’s,” Jochen Stanzl, chief market analyst at trading platform CMC Markets, told CNN. “A lot of the good news is already priced in. Now investors have started to take profits and they seem to prefer to sell stocks that have performed best since the beginning of the year.”
The excitement that artificial intelligence could radically change the way we live and work and bring huge profits to investors has driven much of the stock market returns over the past year and a half.
Nvidia is a member of the so-called Magnificent Seven, the mega-cap technology companies whose shares significantly outperformed the broader U.S. stock market rally last year. The S&P 500 index rose 24.2% in 2023, compared to the average rise of 111% for stocks in the Magnificent Seven.
In a note published on Monday, Deutsche Bank noted that the U.S. stock market is “close to being the most concentrated in history” due to the dominance of those seven stocks. On Tuesday, the bank wrote that the previous day’s decline in Nvidia stock had “depressed U.S. equity returns generally.”
I-Hwa Cheng/AFP/Getty Images
Nvidia CEO Jensen Huang speaks at the Computex technology trade show in Taipei, Taiwan in June 2024.
The S&P 500 closed 0.3 percent lower on Monday, while the technology-heavy Nasdaq fell 1.2 percent.
However, Derren Nathan, head of equity research at investment platform Hargreaves Lansdown, is not too worried about contagion.
“Although Nvidia sneezed, the broader market didn’t catch a cold, and there was a mix of less extreme moves in both directions for the rest of the Magnificent Seven,” he wrote in a note on Tuesday. “Meanwhile, in other sectors, U.S. stocks posted gains (on Monday) in energy, financials and utilities: a sign of investor confidence in the health of the overall economy.”
