Despite a surge in AI spending by tech giants, Nvidia Corp. has seen its market value plummet by $900 billion since its June record high. This drastic selloff suggests that the artificial intelligence-driven boom that propelled the company to new heights may be cooling.
While Microsoft, Amazon, Alphabet, and Meta have all pledged to continue investing billions into AI infrastructure, Nvidia’s shares have tumbled 27% in less than two months. This disconnect has left investors puzzled, as the prime beneficiary of the AI spending boom appears to be facing significant headwinds.
Analysts attribute the decline to broader investor nervousness and the unwinding of global carry trades, rather than any fundamental changes in the AI landscape. However, concerns remain about Nvidia’s ability to monetize its AI investments and the potential for increased competition from its own clients developing their own chips.
Despite the recent slump, Nvidia’s shares have still doubled in value this year, and the long-term outlook for AI remains promising. Analysts suggest that the selloff may have presented a more attractive valuation for long-term investors, as the company’s shares were previously trading at a significant premium.
As the narrative around AI chipmakers continues to evolve, Nvidia’s upcoming earnings report at the end of August will be closely watched for any signs of a shift in the market’s perception of the company’s AI-driven growth prospects.
Mindblowing amount, huge loss.