September 4th 2024.
Nvidia, the renowned company known for its groundbreaking AI chips, has recently faced a challenging situation. Despite once being the most valuable company in the world, it now finds itself in a major rut.
On Tuesday, the stock market witnessed a historic decline in Nvidia's share prices, resulting in a loss of $279 billion in total market value. This staggering drop surpassed the previous record set by Meta in 2022, which was $356 billion. To put things into perspective, only 27 companies in the world are worth as much as Nvidia lost in one day. This astonishing $415 billion loss is more than the total value of some of America's biggest corporations, including McDonald's, Chevron, and Pepsi.
As the Chief Executive Officer and largest individual shareholder of Nvidia, Jensen Huang also took a significant hit on Tuesday, losing $15 billion in personal wealth due to the company's sharp decline. This decline has been ongoing since June 18, when Nvidia's value reached a record high of $3.3 trillion, making it the most valuable public company.
However, as the US economy shows signs of potential weakness, investors have grown doubtful of the sky-high valuations of Nvidia and other AI stocks. There is a fear that companies may hesitate to invest in this promising yet unproven technology amidst economic uncertainty.
Despite reporting excellent earnings last week, Nvidia's somewhat conservative outlook disappointed investors who were hoping for more growth. This led to a further decline in the company's stock. On the other hand, the use of facial recognition technology in Australian retailers has sparked discussions about its potential implementation and the ethical concerns surrounding it.
Since reaching its peak on June 18, Nvidia's stock has fallen by more than 20%. Similarly, Microsoft, another big player in the AI industry, has seen a 12% decline from its recent high, while TSMC, Nvidia's biggest rival in AI chipmaking, has plunged by 18% since mid-July. Even Intel, once the largest chipmaker in the world, has faced a 59% decline in its share prices this year as it struggles to enter the AI market.
Apart from economic challenges, Nvidia may also have to deal with potential legal issues. Reports suggest that the company is under investigation by the US government for potential antitrust violations. This news caused a significant portion of the decline in Nvidia's stock on Tuesday. However, the company has denied receiving any subpoena from the Department of Justice and has stated that it is willing to cooperate with regulators if necessary.
The Biden administration has been aggressively targeting tech giants, including Apple, Google, and Amazon, with investigations and allegations. It remains to be seen if a new administration would continue these actions, but both Kamala Harris and Donald Trump have expressed concerns about the power and influence of tech companies during their campaigns.
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