Nvidia’s $277 Billion Plunge: AI Leader Cedes Ground to Microsoft


Last updated: June 27, 2024

jensen_huang_nvidia_ceo is speakingNvidia’s stock took a hit Thursday, marking a significant shift as the AI behemoth lost its fleeting crown as the world’s most valuable public company, highlighting the broader market’s fragility in the face of Nvidia’s price swings.

Key Facts

Nvidia’s shares plummeted up to 8% from a morning peak to an afternoon trough, ending the day down 3.5% at $131. This reversal wiped out a brief 4% morning gain.

The intraday drop slashed Nvidia’s market value by $277 billion, bringing it down to $3.27 trillion, just below Microsoft’s. Nvidia had surpassed Microsoft’s market cap earlier in the week.

There was no clear trigger for the selloff, suggesting investors were likely cashing in after Nvidia’s impressive 170% rally this year and an 800% surge since last year.

Despite the drop, Nvidia’s stock remains up 40% over the past month.

Why The Market Reacted

Thursday’s dip underscored how sensitive the broader market is to Nvidia’s performance. The S&P 500’s 0.3% morning gain turned into a 0.6% loss by early afternoon, largely due to Nvidia’s slide.

In effect, Nvidia’s drop erased the equivalent market value of Coca-Cola, the 27th most valuable S&P 500 business.

Background

It’s normal for a stock to retreat after a sharp climb like Nvidia’s. While the broad index funds have reaped the rewards from Nvidia’s inclusion, Nvidia’s $2 trillion market cap boost in 2024 accounts for a third of the S&P 500’s 15% gain this year.

Nvidia, a key player in semiconductor technology for AI, reported a sixfold earnings increase last quarter, driven by demand from giants like Microsoft and Google.

Big Number

$345,000. That’s the value of a $10,000 investment in Nvidia five years ago, compared to about $20,150 if invested in the S&P 500.

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About The Author

Co-Founder & Chief Editor
Jon Morgan, MBA, LLM, has over ten years of experience growing startups and currently serves as CEO and Editor-in-Chief of Venture Smarter. Educated at UC Davis and Harvard, he offers deeply informed guidance. Beyond work, he enjoys spending time with family, his poodle Sophie, and learning Spanish.
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Growth & Transition Advisor
LJ Viveros has 40 years of experience in founding and scaling businesses, including a significant sale to Logitech. He has led Market Solutions LLC since 1999, focusing on strategic transitions for global brands. A graduate of Saint Mary’s College in Communications, LJ is also a distinguished Matsushita Executive alumnus.
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