Nvidia has lost more than $500bn in market value since briefly becoming the world’s most valuable company last week, after shares fell almost 7% on Monday.
Nvidia’s market value dropped to $2.91 trillion, down roughly $550 billion from Thursday’s peak.
Monday’s decline follows disclosures on Friday that the chipmaker’s CEO and co-founder, Jensen Huang, sold almost $95 million worth of shares in the days shortly before and after it became the world’s most valuable company. The trades were part of a previously scheduled Rule 10b5-1 sale plan set up in March, filings show.
Earlier last week, the company had leapfrogged Microsoft and Apple to become the world’s most valuable publicly listed company, though it has since fallen back to third place.
Nvidia, whose gains alone had been responsible for roughly a third of the S&P 500’s increase in 2024, is now down about 16% from its intraday high of $140.76 hit last Thursday.
Concerns about Nvidia’s grip on the broader index have intensified in recent weeks. Some analysts warn that a large enough sell-off for the chipmaker could spark a broader market slump.
“If Nvidia corrects pretty hard in the coming months, it becomes very difficult for the [S&P 500] to keep rising,” said Barry Bannister, chief equity strategist at Stifel. “And Nvidia will decelerate,” he added, referring to the company’s hitherto strong earnings growth.
The stock’s rapid ascent has prompted some skeptical observers to draw comparisons with Cisco, the networking equipment maker that briefly became the world’s most valuable company at the peak of the dotcom boom in March 2000.
Cisco lost about 80% of its value in the subsequent year as the bubble burst and telecoms groups slashed their spending on broadband infrastructure.
Nvidia’s reversal has weighed on the broader chipmaking sector, with the PHLX Semiconductor Index down almost 7% over the past three trading sessions. The tech-dominated Nasdaq Composite fell 1.1% on Monday.
Nvidia weighed on the wider stock market on Monday, with the blue-chip S&P 500 closing 0.3% lower despite gains in the majority of sectors. In contrast, the small-cap Russell 2000 index, which has underperformed large-cap indices in recent months, rose 0.4%.
Manish Kabra, head of US equity strategy at Société Générale, said Nvidia’s sell-off on Monday constituted “a super-healthy development for the market.”
“Either the market rally broadens out or we form a bubble [in tech stocks] that we don’t yet have,” Kabra said.
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