Why Nvidia’s stock tumbled overnight despite a strong year

Nvidia’s stock took a historic nosedive overnight, shedding 9.5% and wiping out an eye-watering US$279 billion in market value. This makes it the largest single-day loss ever recorded, thanks to a perfect storm of regulatory scrutiny, economic jitters, and internal challenges.

DOJ investigation underway

The US Department of Justice has been turning up the heat on Nvidia, escalating an antitrust investigation that could reshape the AI hardware landscape.

According to a report from Bloomberg, Nvidia (as well as other key players) have been hit with subpoenas as regulators dig into whether the company is leveraging its dominance to unfairly edge out competitors.

The investigation is looking specifically at whether Nvidia is making it harder for customers to switch suppliers and whether the company is penalising those who don’t exclusively use its chipsets.

At present, Nvidia dominates the AI chip space with around 88% market share.

Growth pains and investor anxiety

While the overnight stock dip was significant, it had already been slipping since the end of last month.

The company’s recent earnings report showed impressive numbers — 152% year-over-year growth in earnings and a 122% jump in sales. However, this still didn’t quite live up to the sky-high expectations set by (last few quarters) and saw the stock slip.

Nvidia’s guidance on gross profit margins for the rest of the year wasn’t what investors were hoping for. This raised concerns about whether the company can maintain its rapid growth.

This was affected by the potential delays in the release of Nvidia’s next-gen Blackwell series of AI chips. Reports of design flaws and manufacturing hiccups have only added to the uncertainty surrounding Nvidia’s near-term prospects.

There’s also some broader concerns at play with continued global economic slowing and how that’s affecting the semiconductor industry. Not to mention, questions on whether the almost two-year AI bubble will burst.

Despite the overnight bloodbath, it’s worth remembering Nvidia’s stock is still up 124% for the year. It may be that the chipmaker has peaked, but time will tell on that.

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