Nvidia shares drop 9.5%, loses $279 billion in market cap, leads to Asian market sell-off

The AI chipmaker, Nvidia, saw an unprecedented 9.5 per cent, trading at $108 apiece decline in intraday trade on Tuesday. This plunge follows the publication of the US PMI data for August, which brought up worries regarding the health of the U.S. economy.

Nvidia lost about $279 billion in market cap, the biggest one-day market cap wipeout for any company on Tuesday, as reported by Reuters.

Post Bloomberg’s report that the AI giant received a subpoena from the U.S. Department of Justice as a part of its antitrust investigation, the shares of the company slid further 2 per cent during after-hours trading.

The Nvidia stocks have been bumpy, slumping 14 per cent in the three sessions since the chipmaker revealed their quarter-two earnings for FY25. Although the Q2 results beat Wall Street expectations, it also showcased a slowdown in growth.

Impact on the U.S. Market

The PHLX chip index slumped 7.75 per cent on Tuesday, the index’s biggest intraday drop since 2020.

Overall, the U.S. stock market was down in the red, with the Dow Jones Industrial Average and S&P 500 falling 1.5 per cent and 2.1 per cent, respectively. The Nasdaq Composite was down nearly 3 per cent.

U.S. mega cap companies, that is, companies with a market cap of more than $200 billion, such as Apple, Meta, Amazon, Alphabet (Google) and Microsoft, were also down.

There have been expectations of a Fed rate cut in the upcoming September 18 policy meeting, which has been driving hope for investors.

Sell-off in the Asian market

Following the Nvidia plunge, semiconductors and associated equities in Asia saw sell-offs on Wednesday morning.

Leading the losses in Asia, Japan’s Nikken 225 plunged 3.19 per cent, and the broader Topix lost 2.79 per cent.

South Korea’s Kospi index and the Taiwan Weighted Index both saw a drop of 2.71 per cent and 3.49 per cent, respectively.

Nvidia’s supply chain entities in South Korea, namely Samsung Electronics and the chipmaker HK Hynix, both saw a drop of 2.6 per cent and 6.36 per cent, respectively.

Tokyo Electronics and Advantest, the other Nvidia suppliers, saw a plunge of 7 per cent and over 8 per cent, respectively.

Softbank Group, the Japanese holding company that owns a stake in Nvidia’s chip designer, Arm, lost 6 per cent.

The Taiwan Semiconductor Manufacturing Company witnessed a plunge of 3.56 per cent, and Foxconn, which has a strategic partnership with Nvidia, saw a decline of 5 per cent.