Is Nvidia's $279 Billion Loss A Good Investment Time?

Nvidia, a leading company in artificial intelligence (AI), saw its shares drop by 9.5% on Tuesday, marking the largest single-day loss in market value ever for a U.S. company. This drop led to a $279 billion loss in Nvidia's market capitalization, signaling that investors are becoming more cautious about AI technology, which has been a significant driver of this year's stock market gains.

The PHLX chip index also experienced a significant decline, falling by 7.75%, the biggest one-day drop since 2020.

This nervousness about AI follows Nvidia's recent quarterly forecast, which fell short of investors' high expectations, causing concern. According to Todd Sohn, an ETF strategist at Strategas Securities, too much money has been poured into tech and semiconductor stocks over the last year, causing the market to be unbalanced.

Intel also saw a nearly 9% drop in its stock after news emerged that its CEO, Pat Gelsinger, and key executives plan to propose cutting unnecessary businesses and revamping capital spending to the company’s board of directors.

Recently, concerns have grown about whether the large investments in AI will pay off, affecting some of Wall Street's most valuable companies, like Microsoft and Alphabet, whose shares fell after their July quarterly reports. BlackRock strategists pointed out that investors need to consider whether companies are wisely using their resources when spending on AI.

Despite these recent losses, Nvidia's stock is still up by 118% for the year, though it had nearly tripled at its peak in July.

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