Nvidia, the company behind the AI chip boom, has experienced a massive drop in its market value over the past three days, with roughly $430 billion wiped out, the biggest three-day value loss for any company in history. If measured from its intraday peak on Thursday, more than half-a-trillion dollars have been lost, nearly the entire value of Tesla.
The sudden decline has raised concerns about the overall stock market, as a significant correction in Nvidia’s stock could make it difficult for the S&P 500 to continue rising. The timing of the drop is particularly unfortunate, coming just before Nvidia’s annual shareholder meeting and two weeks after a 10-for-1 stock split that made it easier for retail investors to buy into the company.
Nvidia’s founder and CEO, Jensen Huang, has also contributed to the pressure by cashing out himself through a Rule 10b5-1 trading plan, which automatically executes sales when certain conditions are met. Huang liquidated 720,000 shares worth nearly $95 million this month alone.
Analysts attribute the drop to profit-taking and concerns about AI data center spending peaking. However, some argue that Nvidia still looks cheap compared to Cisco during the dotcom era, when it surged on the back of internet infrastructure spending. Despite this, Nvidia’s stock chart suggests further pressure until the price settles around a support line like the 50-day moving average.
