Nvidia shares suffers largest single-day value drop in U.S. history
Despite delivering strong financial results for the second quarter 2024, Nvidia, the American semiconductor giant, has triggered a wave of unease in the market. Following the Q2 reports published on 28 August, the company’s shares dropped by 7 percent, wiping out $200 billion in market capitalisation. Then, on 3 September, shares plunged nearly 10 percent, wiping almost $300 billion—the largest single-day value drop in U.S. stock market history.
$30 billion in revenue for Q2 2024
End of August, Nvidia reported a revenue increase of 122 percent year-over-year, reaching $30 billion for the quarter ending in July. While this figure surpassed the expectations of many analysts, who had forecasted $28.8 billion, it fell short of the most optimistic projections that anticipated up to $38 billion. This prompted a strong reaction on Wall Street, causing Nvidia’s stock to plummet as concerns spread throughout the tech sector.
Expectations set too high
The market’s response reflects the high bar set for Nvidia, which had previously seen its revenues triple in recent quarters. This reaction was not confined to Nvidia alone, other companies in the AI sector, including Broadcom, Advanced Micro Devices, Microsoft, and Amazon, also saw their stock prices decline, collectively losing hundreds of billions of dollars in market value.
Nvidia, however, remains the leader in the AI chip market, thanks to its advanced graphics processing units (GPUs), which are crucial for AI development. Its popular Hopper microprocessors, like the H100, are in high demand, and the upcoming Blackwell GPU series is expected to strengthen Nvidia’s market position even further.
Reality check
Nvidia’s recent stumble shows growing investor anxiety about the sustainability of AI-driven growth. Nvidia’s recent dip is a sign of expectations catching up with reality, as the company faces the challenge of maintaining its extraordinary growth trajectory in an increasingly competitive landscape.
