Jensen Huang's Nvidia loses record $279 billion in market value. Here's why

Nvidia shares fell 9.5%, the largest single-day market value loss for a US company. The decline of $279 billion indicates rising investor caution about AI.

Nvidia shares fell 9.5% resulting in the deepest ever single-day decline in market value for a US company amid a broad market selloff following tepid economic data. Nvidia lost $279 billion in market capitalization, a major indication that investors are becoming more cautious about AI technology which has fueled much of this year's stock market gains.

Jensen Huang, co-founder and chief executive officer of Nvidia Corp., during a news conference in Taipei, Taiwan.(Bloomberg)

This comes as Nvidia gave a quarterly forecast which failed to meet expectations of investors who have driven a rally in its stock. Todd Sohn, an ETF strategist at Strategas Securities, said as per news agency Reuters, “Such a massive amount of money has gone to tech and semiconductors in the last 12 months that the trade is completely skewed.”

BlackRock strategists wrote in a client note, “Some recent research has questioned if the revenues from AI alone will eventually justify this wave of capital spending on it. When assessing AI capex by individual companies, investors must consider if they are making the best use of their balance sheets and capital.”

At its July record high close, Nvidia almost tripled in 2024. Its recent losses leave it up 118% year to date. Nvidia's record one-session loss in stock market value was greater than the $232 billion decline suffered by Facebook-owner Meta Platforms in February.