Nvidia Stock Sinks 5%, Market Cap Loses $500 Billion

Nvidia’s historic stock rally experienced further setbacks on Monday, as shares of the leading artificial intelligence technology company continued to decline, marking one of its worst periods in years. By late morning, Nvidia’s stock had dropped over 5% to approximately $120, hitting its lowest intraday price since June 10, the day of its 10-for-1 stock split. The recent downturn follows drops of 3.5% on Thursday and 3.2% on Friday, bringing its total loss since Tuesday’s record close to 12%. During this period, Nvidia’s market capitalization has plummeted by an astounding $400 billion. This decline occurred without any major negative catalysts, likely representing a significant correction after substantial gains.

From its intraday peak on Thursday, Nvidia’s market value has fallen by more than $500 billion, a drop greater than the total valuation of Exxon Mobil, the S&P 500’s 14th-largest company by market cap. If Monday’s losses persist, it will be the first time since June 2022 that Nvidia shares have fallen 3% or more in three consecutive trading sessions, during which the stock traded below $20 per share. On Monday, Nvidia’s market value decreased by over $150 billion to $2.9 trillion, setting it on track to close below $3 trillion for the first time since June 11. Despite the decline, Nvidia remains the world’s third-largest company, trailing only Apple and Microsoft.

Monday was generally positive for the broader market despite Nvidia’s decline. The median S&P stock rose 1%, and the Dow Jones Industrial Average gained 380 points (1%) to reach a four-week high. However, the S&P only increased by 0.3%, and the tech-heavy Nasdaq fell 0.2%, underscoring Nvidia’s significant influence on the market cap-weighted S&P and Nasdaq. Nvidia is not part of the 30 stocks comprising the Dow, which has caused the index to underperform its peers over the last 18 months.

Despite the recent slump, Nvidia has delivered an impressive 140% return to investors this year and a remarkable 1,000% return since its October 2022 low. Nvidia’s rise coincided with Wall Street’s growing focus on generative AI, as Nvidia designs much of the technology powering AI applications. The company reported a 628% year-over-year increase in earnings for its quarter ending April 30, showcasing its earnings power, though it likely needs to continue rapid growth to justify its high valuation.

Jensen Huang, Nvidia’s CEO since its founding, saw his net worth drop by more than $5 billion on Monday due to the company’s stock tumble. Huang is now approximately $15 billion less wealthy than he was at Tuesday’s market close, but he remains the 15th-richest person in the world with a net worth exceeding $105 billion.