Nvidia Stock Loses $130 Billion in Value on $500 Billion AI Financing Report

Nvidia’s stock dropped more than 3% on Tuesday, wiping out roughly $130 billion in market value, after a report claimed the chipmaker is entering a $500 billion artificial intelligence financing deal with Wall Street partners, including BlackRock [216041]. The sell-off came as investors weighed the scale of the new funding effort against the company’s current valuation [216041]. The deal, if confirmed, would be one of the largest private AI investments to date, but Nvidia has not yet issued an official statement [216041]. The stock later pared some losses as analysts noted the report had not been independently verified [216041].

The decline adds to growing worries about the concentration of stock market borrowing in a few AI companies [216097]. Many of these stocks have already seen historic price swings, and if those AI names drop sharply, leveraged bets could force rapid selling, spreading losses far beyond the tech sector [216097]. Wall Street has also seen a surge in leveraged exchange-traded funds, or ETFs, which use borrowed money to double or triple daily moves in tech stocks [215042]. When tech stocks fall, these funds fall just as fast, making them a risky bet for anyone holding them for more than a single trading session [215042].

The recent 20% drop in Nvidia’s stock has also flashed a rare market warning known as a “death cross,” when a stock’s short-term average price falls below its long-term average [215980]. The last time Nvidia triggered this pattern was in 2022, after which shares lost nearly half their value over the following months [215980]. The current decline is driven by cooling demand for AI chips and a broader rotation away from technology stocks [215980]. Despite the grim technical picture, some analysts argue Nvidia’s fundamentals remain solid, as the company still holds a dominant position in the AI hardware market [215980].

Separately, private credit markets are showing increasing strain, with default rates climbing to their highest levels in recent years [215997]. Internal assessments of loan portfolios suggest the pressure may intensify, challenging the upbeat narrative often presented by private credit firms [215997]. While the analysis does not predict a systemic collapse, it underscores that the era of easy credit conditions may be ending [215997].