Nvidia Loses Trillion Dollars of Market Value in Two Months

The giant US chipmaker Nvidia has lost about a trillion dollars of its nominal value in less than two months, bringing its share price to its lowest level since the artificial intelligence stock boom.

Bloomberg News reported that Nvidia's graphics processing units (GPUs) dominate the AI data center market, but the company's shares have fallen 16% since hitting an all-time high on May 14, as investors restructured their AI investments by dumping Nvidia in favor of rival semiconductor manufacturers, especially those in the memory chip market.

This sharp decline in the share price—until recently the hottest stock on Wall Street—has pushed it to trade at 18 times expected earnings over the next twelve months.

The last time the stock traded at such a low multiple was in early 2019, while the average price-to-earnings ratio for stocks on the S&P 500 index is over 20 times expected earnings, and for stocks on the Nasdaq technology index, over 23 times.

Nvidia's decline is not due to deteriorating expectations; on the contrary, Wall Street analysts have raised their earnings forecasts for the coming quarters. This drop reflects a shift in the AI market toward other sectors, such as memory and storage chip stocks like Micron Technology, while shares of Nvidia's competitors, such as Advanced Micro Devices (AMD) and Intel, have doubled or even tripled this year.