Nvidia Faces Historic Market Decline Amid Antitrust Probe

Nvidia, once the world's most valuable company and a leading force in AI chipmaking, is experiencing a dramatic downturn. Last Tuesday, Nvidia faced the largest single-day market value loss in stock market history, with a staggering 9.5% drop in share price that erased $279 billion from the company's valuation. This decline significantly surpasses the previous record loss of $240 billion set by Meta in 2022.

To put this loss into perspective, $279 billion is more than the total market value of some of America's largest corporations, such as McDonald's, Chevron, and Pepsi. Nvidia's CEO, Jensen Huang, the company's largest individual shareholder and the fifth-largest overall including institutional investors, saw his personal wealth diminish by $10 billion due to the sharp fall in Nvidia’s stock price.

Nvidia's decline began after peaking at over $3.3 trillion in value on June 18, the highest valuation for any public company. As the U.S. economy shows signs of stress, investors have grown cautious about Nvidia and other AI stocks' lofty valuations. Concerns about potential economic weaknesses are leading to skepticism over continued investments in the still-nascent AI technology sector.

Despite reporting blockbuster earnings in early September, Nvidia's cautious outlook did not meet investor expectations, contributing to the stock's decline. Since June 18, Nvidia's stock has fallen over 20%, while Microsoft, another major player in AI, has seen a 12% drop from its recent peak, and TSMC, a major competitor in AI chipmaking, has plunged 18% since mid-July. Intel, once the leading chipmaker, has experienced a 59% decline in its share price this year due to its own challenges in the AI space.

Adding to Nvidia's troubles, the company is reportedly facing a subpoena from the U.S. Justice Department as part of an antitrust investigation, according to Bloomberg. Neither the Department of Justice nor Nvidia has confirmed the details of this investigation. An Nvidia spokesperson stated, "Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them."

The Biden administration has been actively investigating major tech firms, including Apple, Google, and Amazon. Future antitrust scrutiny under potential future administrations, such as those led by Kamala Harris or Donald Trump, remains uncertain, although both candidates have criticized tech companies during their campaigns.

Despite the recent downturn, Nvidia's stock gained approximately 1% last Wednesday, while the Nasdaq Composite, which fell more than 3% last Tuesday, remained unchanged. AI enthusiasts remain optimistic about Nvidia, with the stock up 118% year-to-date and maintaining a $2.7 trillion market valuation, ranking third behind Apple and Microsoft. Huang recently reported that demand for Nvidia's new "Blackwell" AI chips significantly exceeds supply, and the company’s GPUs are delivering substantial returns for investors.

Dan Ives from Wedbush sees Nvidia’s current stock decline as a potential buying opportunity, noting, “Nvidia has changed the tech and global landscape as its GPUs have become the new oil and gold in the IT landscape.”

ETB NEWS :Wenrui Fei and Meixing Ren contributed to this articl.