NVIDIA Faces $279 Billion Loss Amid AI Optimism Reevaluation

Nvidia experienced a significant loss last week, with its market capitalization dropping by 279 billion dollars due to a 9.5% decline in its share price. This marked the largest single-day decline for an American company in recent memory, according to Reuters. The drop was attributed to the fading optimism around artificial intelligence, which led to a sudden reassessment in the face of weaker economic data.

The broader chip manufacturers' index, RNLX, also saw a steep decline of 7.75%, its biggest one-day drop since 2020.

This downturn in Nvidia's stock came after the company provided a quarterly forecast that failed to meet the high expectations set by investors, despite a massive surge in its share value earlier in the year. The disappointing forecast led to a broader impact on the sector, with Intel’s stock also declining by about 9%.

Following the market close on Friday and the end of July, Nvidia had nearly recovered its capitalization for the year. However, the recent downturn has left the company with a 118% increase in its year-to-date share price.

Nvidia, which has been riding the AI wave, reported target results exceeding 30 billion dollars—beating expectations of 28.7 billion dollars—and more than doubling its profit to 16.6 billion dollars, surpassing forecasts by 1.6 billion dollars. Despite these strong figures, the team led by Jensen Huang acknowledged that results might fall short of expectations in the third quarter. This comes as some experts express concerns that the AI-driven optimism propelling Nvidia may be overblown.

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