Nvidia, a giant in the area of artificial intelligence chip development, which in the current year was for some time the most valuable company in the world and in June crossed the $3 trillion market capitalization indicator, suddenly found itself on a downward trajectory, although the prospects were optimistic and the symbolic road ahead was through the gardens of prosperity under the sun.
Last Tuesday, September 3, the mentioned firm experienced what can be called a terrible day in its history. In this case, it implies a significant downturn in the value of shares of the largest developer of chips necessary for training and ensuring the subsequent functioning of artificial intelligence systems. The corresponding indicator fell by 9.5%. In monetary terms, this downward trajectory caused the company’s market capitalization to decrease by as much as $279 billion. It is worth noting that this drop was a negative event that had a global impact on the shares of other technology companies. For example, Samsung’s securities fell by 3.45%. Also, the value of equities SK Hynix, which provides high-bandwidth memory chips for Nvidia, showed a decrease of 8%. Tokyo Electron shares fell by 8.5%.
Terrible days like Nvidia’s new unpleasant experience are not something that has never happened in the past. For example, in 2022, Meta’s market capitalization decreased by $240 billion. It is worth noting that such falls in the market do not mean a critical threat to the continued existence of the company, although they can sometimes be the beginning of an irreversible path to the end.
It is noteworthy that the amount that accounted for the drop in Nvidia’s market capitalization index is equivalent to the value of 27 companies from different regions of the world. This amount also exceeds the total value of shares of such US firms as, for example, McDonald’s, Chevron, and Pepsi.
Nvidia chief executive officer Jensen Huang, who is the company’s largest individual shareholder, personally lost $10 billion on Tuesday.
It is worth noting that the chip developer has actually been on a downward trajectory since June 18, when its market capitalization exceeded the $3.3 trillion mark. The pace of the decline was not rapid or terrible, which is why the drop recorded on Tuesday was a shock or perhaps shock therapy. Currently, there is a state of affairs in the space of the economic system of the United States that contains signs of stress. Against the background of this situation, some investors begin to evaluate Nvidia’s market capitalization indicator through the paradigm of skeptical perception. The mentioned figure is not just high, but very high. Fears are currently spreading among stock traders that, due to the potential weakness of the United States economy, some companies may abandon plans to invest in artificial intelligence or cut financial injections into AI, which has already demonstrated impressive cognitive abilities and has significant prospects, but still remains to some extent a mystery from the point of view of the probable horizons of its evolution. Machine intelligence can generate something that corresponds to such an abstract concept as a futurological breakthrough, but currently, there is no understanding as to what form the corresponding leap in the development of the digital mind will take. For investors, uncertainty is a kind of logical barrier to continued financial injections.
Nvidia’s growth has also generated what can be called inflated expectations. This means that for the company, growth as such is no longer a positive indicator in the perception of investors since they are interested in maximizing the upward trajectory.
Shares of Microsoft, which has made huge bets on artificial intelligence, fell by 12% compared to peak levels.
The dynamic of Nvidia securities was also affected by some other factors. The media reports that the United States government intends to conduct an investigation against the company for potential violations of antitrust laws. There is also preliminary information that the US Justice Department sent Nvidia a subpoena as part of an antitrust probe. It is worth noting that the company denies receiving this subpoena. The firm’s official statement notes that the company has inquired with the US Department of Justice and has not been subpoenaed. At the same time, information about a different state of affairs has already had an impact on Nvidia shares.
It is worth noting that the administration of the President of the United States Joe Biden is interested in the details of the activities of technology giants, including, for example, Apple, Google, and Amazon.
As we have reported earlier, Nvidia Exceeds Earnings Expectations.
