In breaking news, Nvidia has lost its position as the world’s most valuable listed company after its stock plunged almost 13% in the past week. The US chipmaker’s market capitalization hit $3.34 trillion on June 18 to surpass Microsoft, but has since shed $430 billion. Now worth $2.91 trillion, Nvidia has fallen into third place globally, behind Microsoft and Apple.
Shares in Nvidia tumbled 6.7% on Monday, marking its third-straight day of declines, signaling a potential cooling of investors’ excitement over the company’s role in the artificial intelligence revolution. “While we do believe in AI, there have been signs of overexuberance in the US market over the last month,” said Jim Reid, a research strategist at Deutsche Bank.
Nvidia’s stock has seen significant growth, soaring almost 139% over the past year. The company’s chips power AI systems, including generative AI technology. “What we see with Nvidia is typical volatility, which is expected when a stock rises as quickly as Nvidia’s did,” explained Jochen Stanzl, chief market analyst at trading platform CMC Markets.
The frenzy surrounding the potential of AI to revolutionize various industries and yield high returns for investors has been a driving force in the stock market’s performance over the past year and a half. Nvidia is a part of the Magnificent Seven, a group of mega-cap tech companies that outperformed the broader US stock market rally last year.
Despite Nvidia’s recent decline, there is no widespread concern of contagion in the market. “Although Nvidia has sneezed, the wider market hasn’t caught a cold,” said Derren Nathan, head of equity research at investment platform Hargreaves Lansdown. Overall, US stocks saw gains in other sectors on Monday, including energy, financials, and utilities, indicating investor confidence in the health of the broader economy.
