Nvidia Shares Plunge in Correction, Losing $430 Billion Amid Market Slump

Nvidia Corp. shares entered correction territory on Monday after a significant market downturn erased a record amount of value for the AI chipmaker.

The stock dropped by 6.7%, marking its third consecutive loss and the largest single-day percentage decline since April. Over three days, Nvidia’s market value plummeted by about $430 billion, the biggest three-day loss for any company in history, according to Bloomberg data.

Impact on the Semiconductor Sector

This 13% fall over the period pushed Nvidia past the 10% decline threshold, which defines a correction. The fall also impacted other chipmakers, with the Philadelphia Semiconductor Index dropping 3% on Monday. Shares of Broadcom Inc. fell 4%, Qualcomm Inc. dropped 5.5%, and ARM Holdings Plc slipped 5.8%. US-listed shares of Taiwan Semiconductor Manufacturing Co. (TSMC) lost 3.5%.

Nvidia’s market value dipped below the $3 trillion mark, placing it behind Microsoft Corp. and Apple Inc. Nvidia briefly held the title of the world’s largest stock last week.

Investor Sentiment

“In the short term, investors might start feeling ‘AI fatigue’ or worry about the concentration of certain stocks in the index,” said Neville Javeri, portfolio manager at Allspring Global Investments.

Despite the recent decline, Nvidia’s stock is still up nearly 140% this year, making it the second-best performer in the S&P 500 Index, just behind Super Micro Computer Inc., another popular AI stock. Nvidia previously faced a 20% dip earlier this year but quickly bounced back to its highest levels.

Concerns Over Valuation

While demand for Nvidia’s AI chips has driven a significant stock rally—up around 240% in 2023—there are growing concerns about its high valuation. Nvidia’s stock is currently trading at 21 times its expected sales over the next 12 months, making it the priciest in the S&P 500 by this metric. However, it remains popular on Wall Street, with nearly 90% of analysts recommending buying the stock. The average price target from analysts suggests a potential 12% rise from current levels.

“The surge in Nvidia and AI stocks has been remarkable,” said Charlie Ashley, portfolio manager at Catalyst Funds. “I wouldn’t bet against this trend right now.”