Nvidia’s stock experienced an unprecedented decline on Tuesday, plummeting over 9% during regular trading and an additional 2% in after-hours. This dramatic drop erased $279 billion from Nvidia’s market value, marking the largest single-day loss in U.S. stock market history. The loss exceeds the entire market capitalization of major companies like McDonald’s and Chevron.
The massive downturn was triggered by news of a subpoena from the U.S. Department of Justice related to an antitrust investigation. Jensen Huang, Nvidia’s CEO and largest individual shareholder, saw his personal wealth diminish by $10 billion in a single day.
Despite dominating approximately 80% of the AI chip market, Nvidia is facing scrutiny from the DOJ. A company spokesperson defended Nvidia, asserting that its success is due to merit and customer choice rather than any anticompetitive practices.
Tuesday’s sell-off also affected other tech moguls, including Elon Musk, Mark Zuckerberg, and Jeff Bezos, but Huang experienced the most significant personal financial loss. Huang, who had recently been a centibillionaire, saw his net worth drop by $9.8 billion, as reported by Bloomberg and Forbes.
Nvidia’s $279 billion market cap drop surpassed Meta’s $251 billion decline from February 2022. This severe market reaction marked the worst day for equities since August 5, drawing comparisons to the 1987 Black Monday crash.
The situation may worsen, with Nvidia’s shares expected to fall further following a Bloomberg report about the DOJ’s expanded investigation into the company. Huang’s representatives did not deny the report and reiterated Nvidia’s stance that its success is based on superior products and services.
Huang, a renowned figure in the tech industry, founded Nvidia with a vision to create advanced processors for video game graphics. The company has since become a leader in AI training chips, with its GPUs powering major AI projects and cryptocurrency mining operations.
Nvidia’s dominance in the AI chip market is under review as regulatory agencies investigate potential anticompetitive behavior. The outcome of this investigation will determine if Nvidia’s market leadership results from innovation or unlawful practices.
Recent developments have dampened enthusiasm for AI stocks, with concerns about overvaluations and the future returns on AI investments. BlackRock’s global head of research and JPMorgan have both expressed skepticism about the long-term benefits of AI, suggesting that substantial productivity gains may not materialize as expected.
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