Nvidia is in the spotlight for a dramatic plunge in its stock value. Over the past week, the company’s shares fell by over USD 16.02, bringing its price to USD 102.83—a decline of 13.49 percent. This drop follows a staggering USD 279 billion decrease in Nvidia’s market value in a single day, marking the largest one-day decline in U.S. stock history. At the time of writing, Nvidia’s market cap is approximately USD 2.522 trillion.
Here are three key reasons behind Nvidia’s recent historic fall:
1. Regulatory Scrutiny: Nvidia is under intense scrutiny following a formal written order from the U.S. Department of Justice as part of an antitrust investigation. Although Nvidia claims it has not been subpoenaed and maintains fair competition practices, the ongoing investigation and heavy investments in other AI companies have raised concerns among investors. Analysts worry about potential preferential treatment towards Nvidia’s investees and customers, contributing to the stock’s decline.
2. Disappointing Forecasts: Despite significant growth, Nvidia’s latest quarterly forecasts fell short of analysts’ expectations. While recent earnings exceeded predictions, the pace of growth has slowed, and this trend is not going unnoticed by investors. Additionally, the chip sector as a whole has seen a downturn, with its market cap shrinking from USD 574.1 billion in 2022 to USD 526.9 billion in 2023.
3. AI Investment Overload: Investment in AI has been on the decline, with mergers and acquisitions in the sector dropping from USD 117.16 billion in 2022 to USD 80.61 billion in 2023. Private investment also fell from USD 103.4 billion to USD 95.99 billion. This decline in AI investments and the overall unpredictability of the AI market have contributed to investor fatigue.
Looking Ahead: Despite these challenges, Nvidia is optimistic about its future. The company anticipates that next-generation AI models will require significantly more computing power—10 to 20 times more than what is currently available. This growing demand for its data-center GPUs is expected to drive substantial revenue growth. The AI chip market is projected to generate USD 311 billion in annual revenue by 2029, compared to this year’s estimate of USD 123 billion. Even if Nvidia’s AI chip market share drops by 70 percent over the next five years, its stronghold on the market and powerful GPUs could still result in USD 217 billion in revenue. Nvidia’s data-center revenue is anticipated to double in the coming years, highlighting a promising future despite the current setbacks.
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