Nvidia shares lose $175 billion on selloff in chip stocks, behind worst day in six weeks

Topline

Fresh off a record closing high, Nvidia shares plunged Tuesday amid a slump in the semiconductor chip stock with an unusual stimulus: a less-than-stellar earnings release from a Dutch company that was accidentally released earlier than expected.

Important facts

Surprising fact

The U.S. chip inventory drop came after Dutch company ASML, which makes much of the equipment used to make the high-tech AI chips and works closely with Nvidia, reported earnings a day earlier than expected, the company said attributed to a “technical error.” The unexpected release included a warning of “more gradual” growth for ASML and said it expects revenue between $32.7 billion and $38.1 billion in 2025, well below consensus forecasts analysts at $39.1. ASML's New York-listed American Depository Receipts fell 17.5% in Tuesday trading, its worst loss since March 2020 and the second-worst day in the last decade for the stock.

Important background

With a market capitalization of $3.2 trillion, Nvidia remains the second-largest company in the world, trailing only $3.5 trillion iPhone maker Apple, which hit its highest share price ever on Tuesday morning. After Nvidia ended 2023 with a whopping gain of 239% as the best-performing stock in the S&P 500 index, it is also the biggest winner so far in 2024 with a gain of 167%. The increase comes as Nvidia reports exponential profit growth thanks to “insane” demand for its graphics processors, the semiconductor technology that powers generative AI applications at companies like Meta and Tesla. Jensen Huang, Nvidia's CEO since he co-founded the company in 1993, is the 11th richest person in the world, according to Forbes estimates, thanks to his 3.5 percent stake in Nvidia. Huang's net worth fell by $5 billion due to Tuesday's decline.

Further reading

ForbesNvidia shares rise 2% to closing record as the company moves closer to AppleFrom Ty Roush
ForbesNvidia eclipses Microsoft as the world's second-largest company as shares climb to a 6-week highFrom Derek Saul