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Tuesday was not a good day for chip-maker Nividia as the US company suffered a record loss of nearly R5 trillion in market value.

Shares of the AI heavyweight tumbled 9.5%, wiping out $279 billion in market capitalisation and sending shivers down the spines of most companies in the tech world as investors rethought their optimism about artificial intelligence.

Nvidia indeed had the worst day in the history of the stock market, and suddenly the world’s most valuable company is in trouble. much as Nvidia lost in value Tuesday. To put it into context, only 27 companies on the planet are worth as much as Nvidia lost in value on this terrible Tuesday – $279 billion is worth more than all the shares of McDonald’s, Chevron or Pepsi.

As Nvidia’s largest individual shareholder, CEO Jensen Huang, personally lost $10 billion (R180 billion) in wealth.

Ever since its valuation surpassed $3.3 trillion on June 18 – which was a record for any publicly traded firm – the company has been faltering. Investor scepticism over the crazy valuations of Nvidia and other AI firms has intensified as the US economy starts to show symptoms of strain. Economists are now concerned that corporations may reconsider their investment in the promising but unproven technology if there is a possible downturn in the economy.

Despite the massive loss in value, Nividia is facing other troubles as well after the US government reportedly announced an investigation into potential antitrust violations. Much of Tuesday’s decline is being blamed on the US Justice Department which reportedly sent it a subpoena as part of the antitrust probe.

Nvidia however said on Wednesday afternoon that it had not received a subpoena.

“We have inquired with the US Department of Justice and have not been subpoenaed,” an Nvidia spokesperson said in a statement. “Nonetheless, we are happy to answer any questions regulators may have about our business.”

The Biden administration has been pursuing Silicon Valley’s digital giants quite aggressively, opening investigations and filing lawsuits against a number of companies, including Amazon, Apple, and Google. Although it’s uncertain if either Donald Trump or Kamala Harris will pursue those charges, both candidates have attacked tech in their respective campaigns for a variety of reasons.

Haung in the meantime is putting out fires and managing concerns over its stock price, insisting that investments in Nividia are still paying off handsomely.

“People who are investing in Nvidia infrastructure are getting returns on it right away.”

With a $2.7 trillion market capitalisation, the company is valued third behind Apple and Microsoft and is still up 118% for the year. Huang claimed last week that there is “far more demand” than there is supply of its most recent “Blackwell” AI processors. Furthermore, the market for Nvidia’s CPUs is expanding along with the competitors.

One has to wonder how much the bubble can expand before it pops again.

[source:cnn]