Yahoo Finance Nvidia suffers biggest loss in world history after $646 billion bloodbath: 'This is a concern'
The AI and microchip company has lost 13 per cent in valuation in the past three days.
Nvidia stock has fallen for the third consecutive day and the company has entered the history books as a result. The AI technology and microchip giant's value has seen an incredible climb since 2023 and last week became the world's biggest and most valuable company in terms of market capitalisation.
But since then it has been an absolute bloodbath. Shares dropped 6.7 per cent in value on Monday, which takes the total three-day value drop to 13 per cent, or $646 billion (USD$430 billion).
Not only was the 6.7 per cent fall the largest single-day plummet since April, but it's also the biggest three-day value loss for any company in history, according to Bloomberg.
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Buff Dormeier, chief technical analyst at Kingsview Partners, said it's worrying to see.
“The fact that this is happening following all this good news — the split, becoming the largest company — is a concern,” he explained to Bloomberg.
What is causing the stock to drop in value?
That's the question on everyone's lips, especially considering how Nvidia has defied expectations over the past 18 months.
At the start of last year, Nvidia stock was worth $22.33 (USD$14.86) per share. On June 14 this year, it hit its peak at $198.21 (USD$131.88) per share.
When the markets closed in the US on Monday, the shares were worth $177.50 (USD$118.11) each.
After surpassing the likes of Microsoft and Apple for market cap last week, Nvidia has now fallen back to third place with $4.36 trillion (USD$2.9 trillion).
Neville Javeri, portfolio manager and head of the Empiric LT Equity team at Allspring Global Investments, had one suggestion about why we're seeing a drop for the tech giant.
“In the near-term, it is plausible that investors begin suffering from AI-fatigue or become more broadly concerned about index concentration,” he said.
What should investors do?
That is probably the second biggest question on everyone's lips.
Patrick Moorhead, Moor Insights & Strategy founder and CEO, told Yahoo Finance last Friday that investors should be watchful for signs a pullback is here to stay.
While he doesn't see the status quo of Nvidia's dominance changing over the next six to nine months, investors should focus on "the downstream profitability that people in the ecosystem are making or not making."
"These are the software companies like Adobe, Salesforce, SAP, and ServiceNow," he explained.
"Because if those enterprises and those consumers aren't paying more for these new AI features, then this whole gravy train comes to a screeching halt, like we saw in the internet bust."
But Jane Edmondson, head of thematic strategy at TMX VettaFi, suggested you might not have to be too concerned.
“NVDA and its AI peers were ripe for a correction after their huge run-up,” Edmondson said. “Investors are likely taking some profits at quarter end and realigning their portfolio allocations.
"But the underlying fundamentals are still in place.”
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