Think you had a bad day? It’s nothing compared to the drop Thursday by S&P 500 stock Nvidia.
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Shares of the AI poster child dropped 3.5% Thursday. That might not sound like much until you consider what that means for a company valued at $3.2 trillion. In just one day, the company lost $118 billion in market value, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge.
That’s more than 421 companies in the S&P 500 are worth individually — or 85% of the index. It’s almost like a United Parcel Service (UPS) or Citigroup (C) vanished overnight.
The magnitude of Nvidia’s drop underscores just how richly valued AI stocks have become in the S&P 500. “Extreme AI enthusiasm and very large stocks are driving multiples, with the rest of the market seeing a very different valuation,” said Bespoke Investment Group.
Top-Heavy Market
Now that three S&P 500 stocks are worth $3 trillion or more, there’s concern the index is largely in the control of a small number of stocks.
Just three stocks, Nvidia (NVDA), Microsoft (MSFT) and Apple (AAPL), account for roughly a fifth of market-weighted S&P 500 ETFs. And that massive one-day plunge of Nvidia highlights the risk of such concentration.
Amazingly, Nvidia’s fall comes at a time no one can find faults with the stock. Analysts think the company will earn $2.71 a share this fiscal year, up more than 108% from last fiscal year.
And most rate the stock a buy, too. If there’s any worry, the average 12-month price target is 129.38 a share, roughly the same as it is now.
But for now, the direction is up until it isn’t. And when it isn’t, every investor will know it.
Nvidia’s Big Loss
S&P 500 companies worth less than Nvidia’s June 20 $118 billion drop
Company | Ticker | Sector | Now ($ billions) |
---|---|---|---|
United Parcel Service | (UPS) | Industrials | $117.1 |
BlackRock | (BLK) | Financials | $116.3 |
Citigroup | (C) | Financials | $115.6 |
Analog Devices | (ADI) | Information Technology | $113.9 |
Boston Scientific | (BSX) | Health Care | $113.2 |
Regeneron Pharmaceuticals | (REGN) | Health Care | $112.7 |
Lockheed Martin | (LMT) | Industrials | $111.9 |
Chubb | (CB) | Financials | $111.8 |
KLA | (KLAC) | Information Technology | $111.7 |
Boeing | (BA) | Industrials | $108.2 |
Sources: IBD, S&P Global Market Intelligence
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