Nvidia enters correction territory as slump erases $430bn

Nvidia shares entered correction territory on Monday, as an ongoing selloff erased a historic amount of value for the AI-focused chipmaker.

Shares fell 13 per cent over the period, past the 10 per cent threshold that represents a correction. The drop weighed on chipmakers with the Philadelphia Stock Exchange Semiconductor Index falling 3 per cent on Monday. Broadcom fell 4 per cent while Qualcomm Inc. dropped 5.5 per cent and ARM Holdings slumped 5.8 per cent. US-listed shares of Taiwan Semiconductor Manufacturing Co shed 3.5 per cent.

Even with the slump, Nvidia remains up nearly 140 per cent this year, making it the second-best performer among S&P 500 Index components, behind Super Micro Computer, another favourite AI play. While investors have flocked to Nvidia given the sky-high demand for its chips used in AI processing, the scale of Nvidia’s rally — it soared about 240 per cent over the course of 2023 — has underlined concerns about its valuation. The stock trades at 21 times estimated sales over the next 12 months, making it the most expensive in the S&P 500 by this measure. Still, it remains well liked on Wall Street.

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