Nvidia, which briefly held the title of the most valuable public company on the planet, saw its shares experience a rare decline on Thursday. The stock dropped as much as 8% from its all-time high to a 2% decrease on the day, settling at $132 by mid-afternoon. This intraday swing wiped $277 billion off Nvidia’s market value, bringing it down to $3.27 trillion and placing the company behind Microsoft in market capitalization.
The sell-off in Nvidia shares was not attributed to any specific catalyst but rather seemed to be a result of investors taking profits after the stock’s remarkable rally of 170% this year and 800% since last year. Despite the dip, Nvidia shares are still up 40% in the last month alone.
The broader market showed sensitivity to Nvidia’s performance, with the S&P 500 turning a 0.3% gain into a 0.6% loss around 1:45 pm, primarily due to Nvidia. The stock’s intraday drop essentially wiped out the index’s equivalent of Coca-Cola, the 27th most valuable company on the S&P.
This decline after a strong rise is a normal market behavior, and index funds have actually benefited from Nvidia’s inclusion. The company’s significant market cap accounts for a third of the S&P’s market cap-weighted gain so far this year. Nvidia’s success is driven by its production of sought-after semiconductor technology for generative AI applications, with a six-fold increase in profits reported in its latest quarter.
Investing $10,000 in Nvidia five years ago would be worth approximately $345,000 today, compared to about $20,150 if invested in the S&P. Despite this decline, the company continues to be a strong player in the market, with its value and influence significantly impacting broader indices like the S&P 500.
As Nvidia’s shares continue to fluctuate, investors are closely watching its performance and its impact on the broader market. The company’s innovative technology and profitability have positioned it as a significant player in the semiconductor industry, attracting attention from investors and analysts alike.
Article Source
https://www.forbes.com/sites/dereksaul/2024/06/20/nvidia-stock-endures-277-billion-midday-selloff-as-ai-giant-falls-behind-microsoft/
