Nvidia’s stock (NVDA) has tumbled by 14% over the past three trading sessions, despite the company reporting strong second-quarter earnings and revenue that exceeded analyst expectations. The decline is primarily attributed to investor concerns surrounding the company’s future prospects in the rapidly expanding artificial intelligence (AI) market.
While Nvidia’s guidance for the third quarter was also positive, investors appeared hesitant due to the modest margin by which the guidance surpassed consensus estimates. Furthermore, uncertainty surrounding the availability of Nvidia’s upcoming Blackwell 200 AI accelerators, fueled by rumors of potential delays, has heightened investor anxieties.
The stock’s decline began on Friday, with a 6.4% drop, followed by a partial recovery on Monday due to a broader market rally driven by positive inflation data. However, the selling resumed on Tuesday, with the stock falling 9.5% after the Labor Day holiday. This renewed sell-off was exacerbated by broader market weakness and a report by Bloomberg stating that Nvidia had received subpoenas from the Department of Justice over potential monopoly trade practices.
The dramatic plunge in Nvidia’s stock resulted in a $279 billion erosion of the company’s market cap on Tuesday alone. This represents the largest one-day loss for any single stock in history, according to TrendSpider.
The stock’s downturn has also impacted the net worth of Nvidia’s founder, Jensen Huang. His wealth has declined by $9.8 billion since Friday, placing him 18th on the Bloomberg Billionaires Index with a net worth of $94.9 billion. His wealth peaked at $119 billion in mid-June.
Despite the recent market turmoil, analysts remain confident in Nvidia’s long-term prospects. Daniel Ives, an analyst at Wedbush Securities, asserted that the underlying demand for AI in the enterprise sector is significantly exceeding supply. He believes that the concerns surrounding the Blackwell delay are unfounded and that Nvidia remains well-positioned to capitalize on the growing AI revolution.
Despite Tuesday’s 9.53% decline, Nvidia’s stock is still up 118% year-to-date, highlighting the company’s strong performance in 2023. Despite the recent stock volatility, Nvidia’s position as a leading player in the AI market remains solid, and its future prospects appear bright.
