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Nvidia stock suffered a rare tumble Thursday, relinquishing the artificial intelligence motor’s briefly held title as the most valuable public company on the planet and exhibiting broader stock indexes’ sensitivity to price movements from Nvidia.
Critically, the Thursday dip demonstrated the broader market’s sensitivity to Nvidia stock’s performance, as the S&P 500 turned its peak 0.3% morning gain to a 0.6% loss by around 1:45 p.m., with almost all of the fall explained by Nvidia. Essentially, Nvidia’s intraday slide erased the equivalent of Coca-Cola, the S&P’s 27th most valuable company with a roughly $270 billion market cap, from the index.
It is highly normal for a stock to decline after a sharp increase like Nvidia just had. Broad index funds have benefited far more from Nvidia’s inclusion than they’ve been hurt, with Nvidia’s $2 trillion market cap added in 2024 accounting for a third of the market cap-weighted S&P’s 15% year-to-date gain. Nvidia, which produces a majority of the semiconductor technology most coveted for generative AI applications, reported a sixfold increase in earnings in its most recent quarter as customers like Microsoft and Google shell out for the technology.
$345,000. That’s about how much $10,000 invested in Nvidia exactly five years ago would be worth today. The same amount invested in the S&P would be worth about $20,150.
https://www.forbes.com/sites/dereks...y-selloff-as-ai-giant-falls-behind-microsoft/
Critically, the Thursday dip demonstrated the broader market’s sensitivity to Nvidia stock’s performance, as the S&P 500 turned its peak 0.3% morning gain to a 0.6% loss by around 1:45 p.m., with almost all of the fall explained by Nvidia. Essentially, Nvidia’s intraday slide erased the equivalent of Coca-Cola, the S&P’s 27th most valuable company with a roughly $270 billion market cap, from the index.
Key Background
It is highly normal for a stock to decline after a sharp increase like Nvidia just had. Broad index funds have benefited far more from Nvidia’s inclusion than they’ve been hurt, with Nvidia’s $2 trillion market cap added in 2024 accounting for a third of the market cap-weighted S&P’s 15% year-to-date gain. Nvidia, which produces a majority of the semiconductor technology most coveted for generative AI applications, reported a sixfold increase in earnings in its most recent quarter as customers like Microsoft and Google shell out for the technology.
Big Number
$345,000. That’s about how much $10,000 invested in Nvidia exactly five years ago would be worth today. The same amount invested in the S&P would be worth about $20,150.
https://www.forbes.com/sites/dereks...y-selloff-as-ai-giant-falls-behind-microsoft/
