Nvidia suffers record $279 billion loss in market value as Wall Street drops

Shares of Nvidia tumbled 9.5% on Tuesday in the deepest ever single-day decline in market value for a U.S. company.

Shares of AI heavyweight Nvidia tumbled 9.5% on Tuesday in the deepest ever single-day decline in market value for a U.S. company, as investors softened their optimism about artificial intelligence in a broad market selloff following tepid economic data.

Nvidia lost $279 billion in market capitalisation, a major indication that investors are becoming more cautious about emerging AI technology that has fueled much of this year's stock market gains.

The PHLX chip index plummeted 7.75%, its biggest one-day drop since 2020.

The latest jitters about AI come after Nvidia last Wednesday gave a quarterly forecast that failed to meet the lofty expectations of investors who have driven a dizzying rally in its stock.

"Such a massive amount of money has gone to tech and semiconductors in the last 12 months that the trade is completely skewed," said Todd Sohn, an ETF strategist at Strategas Securities.

Intel dropped nearly 9% after Reuters reported CEO Pat Gelsinger and key executives are expected to present a plan to the company’s board of directors to slice off unnecessary businesses and revamp capital spending at the struggling chipmaker.

Worries about slow payoffs from hefty AI investments have dogged Wall Street's most valuable companies in recent weeks, with shares of Microsoft and Alphabet trading lower following their quarterly reports in July.