Nvidia Share Price Dives: Understanding the Implications of the 9% Drop

Nvidia Share Price Faces Historic Decline

Nvidia share price took a remarkable hit, dropping nearly 10% on Tuesday, representing the largest one-day fall in market capitalization for a US company. Investors are showing signs of concern as hopes surrounding artificial intelligence begin to fade. Nvidia shares dipped 9.5% to $108 apiece, translating to a substantial $279 billion in lost market value. This drop signals a cautious sentiment among investors regarding the AI technology that previously drove this year's stock market growth.

Reactions to Nvidia's Earnings Report

Since Nvidia reported its earnings last week, the stock has plummeted 14% over three sessions, despite a year-to-date rise of 118%. Analysts had high expectations for Nvidia, with recent earnings estimates now averaging $70.35 billion through January 2025. However, these estimates are contrasted by the current trading of Nvidia stock at 34 times expected earnings, which is a decrease from over 40 in June.

Broader Market Impacts

• The PHLX chip index suffered a significant plunge of 7.75%, marking its largest one-day fall since 2020.
• Widespread declines were noted across Wall Street with the Nasdaq dropping 3.3% and the S&P 500 down 2.1%.

Nvidia Under Investigation

In addition to the drop in share price, the US Department of Justice has issued a subpoena to Nvidia as part of an ongoing investigation into its antitrust practices. Concerns have been raised about the chipmaker’s influence in the market and its dealings with suppliers.

b"Nvidia's performance is driven by merit and customer choice," stated a company spokesperson, highlighting their commitment to providing optimal value for consumers.