Just one week ago, Nvidia became the world’s most valuable company.
The chipmaker – whose shares had risen nine-fold since the end of 2022 – overtook Microsoft as its stock market valuation reached $3.34trn (£2.63bn).
Since then, the shares have fallen by 13%, declining in each of the last three trading sessions.
That has been enough to clip more than $500bn (£394bn) from Nvidia’s stock market valuation reached when, last Thursday, the shares hit an all-time intra-day high of $140.76 (£110.94) each (taking into account the 10-for-one share split completed earlier this month).
To put that into context, Exxon Mobil – the 14th biggest company in the S&P 500 index and itself one of only a dozen companies ever to achieve the status of the world’s most valuable company – has a stock market valuation of $511bn.
So what is going on?
There are a number of factors at play.
The first is profit-taking. Nvidia shares, prior to last Thursday, had enjoyed a fantastic run and had attracted a lot of hot money from so-called “momentum buyers” who see a stock moving higher and jump on board to profit from the ride.
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It was natural for such buyers to lock in profits by selling.
Added to that is that speculative money has moved on. A report published over the weekend in the Wall Street Journal that Meta Platforms, the parent of Facebook, has held talks with Apple about integrating Meta’s generative AI model into the recently unveiled Apple Intelligence system sent shares in both higher as profits from Nvidia’s recent strong run were recycled.
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2:19
Last week: Nvidia overtakes Microsoft
That money has not left the market – it has simply been redeployed from Nvidia to other stocks, not least Meta and Apple, but also elsewhere.
That can be shown by the fact that the sell-off in Nvidia, while also dragging down peers such as Broadcom, Taiwan Semiconductor, and Super Micro Computer (a server maker which is a heavy buyer of Nvidia’s chips), did not lead to a wider sell-off.
The Dow Jones, admittedly not as good a barometer of the US stock market as the S&P 500, hit its highest level for a month on Monday even as the S&P 500 and Nasdaq, both of which have a heavier weighting in Nvidia, were falling.
Also contributing to the sell-off was the revelation – via a filing to the main US financial regulator, the Securities & Exchange Commission – that Jensen Huang, Nvidia’s founder and chief executive, has taken advantage of the recent rise in the share price to reduce his holding.
Mr Huang, who founded Nvidia in 1993, sold just under $95m (£74.9m) worth of shares between Thursday 13 June and Friday 21 June. Nor is Mr Huang – who still owns more than 866 million shares in Nvidia worth $102.3bn (£80.3bn) at Monday evening’s closing price – the only director to have been selling recently.
Image: Nvidia CEO Jensen Huang is among directors to have recently sold shares
Mark Stevens, a veteran venture capitalist who has been on the Nvidia board since 2008, has offloaded $28m (£22m) worth of shares this month while Tench Coxe, another VC who was one of Mr Huang’s earliest backers and who has been on the board since the start, has sold $119.5m (£94.1m) worth.
Selling by directors is not always a reliable guide to a company’s prospects. Sometimes it reflects personal factors, such as a divorce or estate planning, rather than indicating what a director thinks of a company’s prospects. Rightly or wrongly, though, it is usually taken as a negative signal.
Perhaps the most significant factor in the sell-off, though, is that some investors have been looking at Nvidia through traditional investment yardsticks.
The main one of these is the price/earnings (P/E) ratio. The higher the P/E ratio is, the more expensively a stock is valued.
Last week, after its latest gains, shares of Nvidia were changing hands at 45 times expected earnings.
To put that in context, the forward P/E of the S&P 500 is 22 times and the Nasdaq only slightly more. Put another way, investors were ascribing more than twice the value to Nvidia’s future earnings as they were to those of its peers.
Moreover, as the influential investment magazine Barron’s pointed out at the weekend, Nvidia was being valued at some 20 times its expected sales for the year to the end of January 2026 – a racy valuation, to say the least.
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Stocks with those kinds of valuation have to justify it with spectacular earnings growth.
Yet, as Barron’s columnist Eric Savitz pointed out, Nvidia’s quarter-on-quarter earnings growth has, over the last four quarters, slowed from 88% to 34% to 22% to 18%. Now, quarter-on-quarter earnings growth of 18% is still pretty spectacular. But it does not quite justify a price/earnings multiple that has gone from 25 to 45 over the last year.
Pointing out that from 1976 to 2020, stocks trading at P/E rations of over 15 tended to underperform, Mr Savitz added: “I know what you’re thinking. It’s different this time. This is AI! And sure, maybe AI really is the most important thing to happen in technology since cloud computing, or the internet, or mobile phones, or even the personal computer. But the numbers worry me.
“Nvidia’s market value is now nearly five times the industry estimate for next year’s global chip sales-yes, the total from every company worldwide. Microsoft has seven times the number of employees Nvidia does, and twice the sales. Apple has five times the staff, and triple the sales volume. Nonetheless, this past week, Nvidia’s market cap vaulted past them both.”
Mr Savitz was not the only investment columnist suggesting that, perhaps, Nvidia’s shares might be over-valued.
Some of Monday’s sell-off was also fuelled by the highly influential ‘Heard on the Street’ column in the Wall Street Journal which, at the weekend, invited readers to cast their minds back to the dot-com bubble at the beginning of the century and, in particular, to the gyrations seen at that time in shares of Cisco Systems.
Cisco, the Journal reminded its readers, was favoured along with stocks such as IBM, Lucent and Intel – companies whose hardware were at the forefront of connecting households and businesses to the internet. By the end of 1999, it had become the world’s most valuable company.
The comparison with Cisco has undoubtedly dented sentiment towards Nvidia in some quarters.
Pointing out that today Cisco is now valued at 40% less than it was back then, the Journal highlighted that, at its peak in March 2000, Cisco shares were valued at 131 times forward earnings despite a less impressive financial performance than that recently shown by Nvidia.
Stressing that Nvidia was not is frothily valued as Cisco had been, the column added: “That doesn’t necessarily make Nvidia’s shares safe at their current level, though.
“The stock has seen a big influx of individual investors since the company’s latest financial results last month. Daily retail inflow has averaged nearly $141m since the earnings compared with a daily average of about $39m during the month prior, according to Vanda Research.
“Sell-side analysts are also getting rather exuberant. Several have pushed up their price targets since the stock’s 10 June split. And at least four of those targets are now at $160 and higher, which would put Nvidia’s market capitalization near $4trn at its current share count.
“Nvidia may be the top gun of AI, but investors should be careful not to write checks the stock can’t cash.”
Quite so.
AI is still a nascent technology and it is impossible to know, from here, who may be the greatest winners from it over time.
Just as investors back in 1999, trying to predict who would be the world’s biggest winners from widespread adoption of the internet, could not have known.
“Liberation day” was due to be on 1 April. But Donald Trump decided to shift it by a day because he didn’t want anyone to think it was an April fool.
It is no joke for him and it is no joke for governments globally as they brace for his tariff announcements.
It is stunning how little we know about the plans to be announced in the Rose Garden of the White House later today.
It was telling that we didn’t see the President at all on Tuesday. He and all his advisers were huddled in the West Wing, away from the cameras, finalising the tariff plans.
Treasury Secretary Scott Bessent is the so-called ‘measured voice’. A former hedge fund manager, he has argued for targeted not blanket tariffs.
Peter Navarro is Trump’s senior counsellor for trade and manufacturing. A long-time aide and confidante of the president, he is a true loyalist and a firm believer in the merits of tariffs.
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His economic views are well beyond mainstream economic thought – precisely why he appeals to Trump.
The third key character is Howard Lutnick, the commerce secretary and the biggest proponent of the full-throttle liberation day tariff juggernaut.
The businessman, philanthropist, Trump fundraiser and billionaire (net worth ranging between $1bn and $2bn) has been among the closest to Trump over the past 73 days of this presidency – frequently in and out of the West Wing.
If anything goes wrong, observers here in Washington suspect Trump will make Lutnick the fall guy.
And what if it does all go wrong? What if Trump is actually the April fool?
“It’s going to work…” his press secretary said when asked if it could all be a disaster, driving up the cost of living for Americans and creating global economic chaos.
“The president has a brilliant team who have been studying these issues for decades and we are focussed on restoring the global age of America…” Karoline Leavitt said.
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2:52
‘Days of US being ripped off are over’
Dancing to the president’s tune
My sense is that we should see “liberation day” not as the moment it’s all over in terms of negotiations for countries globally as they try to carve out deals with the White House. Rather it should be seen as the start.
Trump, as always, wants to be seen as the one calling the shots, taking control, seizing the limelight. He wants the world to dance to his tune. Today is his moment.
But beyond today, alongside the inevitable tit-for-tat retaliation, expect to see efforts by nations to seek carve-outs and to throw bones to Trump; to identify areas where trade policies can be tweaked to placate the president.
Even small offerings which change little in a material sense could give Trump the chance to spin and present himself as the winning deal maker he craves to be.
One significant challenge for foreign governments and their diplomats in Washington has been engaging the president himself with proposals he might like.
Negotiations take place with a White House team who are themselves unsure where the president will ultimately land. It’s resulted in unsatisfactory speculative negotiations.
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6:03
Treasury minister: ‘We’ll do everything to secure a deal’
Too much faith placed in the ‘special relationship’?
The UK believes it’s in a better position than most other countries globally. It sits outside the EU giving it autonomy in its trade policy, its deficit with the US is small, and Trump loves Britain.
It’s true too that the UK government has managed to accelerate trade conversations with the White House on a tariff-free trade partnership. Trump’s threats have forced conversations that would normally sit in the long grass for months.
Yet, for now, the conversations have yielded nothing firm. That’s a worry for sure. Did Keir Starmer have too much faith in the ‘special relationship’?
Downing Street will have identified areas where they can tweak trade policy to placate Trump. Cars maybe? Currently US cars into the UK carry a 10% tariff. Digital services perhaps?
US food? Unlikely – there are non-tariff barriers on US food because the consensus seems to be that chlorinated chicken and the like isn’t something UK consumers want.
Easier access to UK financial services maybe? More visas for Americans?
For now though, everyone is waiting to see what Trump does before they either retaliate or relent and lower their own market barriers.
A senior Democrat has taken to the Senate floor to speak against US President Donald Trump – with the 17-plus-hour speech still ongoing.
Cory Booker, a New Jersey senator, began speaking around 7pm (midnight in the UK) and said he intended to disrupt the “normal business of the United States Senate for as long as I am physically able”.
Referring to Mr Trump’s presidency, he said: “I rise tonight because I believe sincerely that our country is in crisis.”
As of 5pm in the UK, Mr Booker was still speaking, having spoken for more than 17 hours. He has remained standing for the entire duration, as he would lose control of the floor if he left his desk or sat down.
Image: As of 4pm, Cory Booker has held the Senate floor for more than 16 hours. Pic: Senate Television / AP
Other Democrat senators have joined Mr Booker to ask questions so he can rest his voice, including Senate minority leader Chuck Schumer.
At the start of his speech, Mr Booker said: “These are not normal times in our nation. And they should not be treated as such in the United States Senate.
“The threats to the American people and American democracy are grave and urgent, and we all must do more to stand against them.”
Overnight, he referenced Strom Thurmond of South Carolina, who filibustered for 24 hours and 18 minutes against the Civil Rights Act of 1957.
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“You think we got civil rights one day because Strom Thurmond – after filibustering for 24 hours – you think we got civil rights because he came to the floor one day and said ‘I’ve seen the light’,” he said.
“No, we got civil rights because people marched for it, sweat for it and [civil rights leader] John Lewis bled for it.”
Only Mr Thurmond and Republican Senator Ted Cruz – who spoke for 21 hours and 19 minutes against the Affordable Care Act in 2013 – have held the Senate floor for longer than Mr Booker.
Mangione has not yet been asked to enter a plea to the federal charges.
Here’s what we know about him.
Wealth, private school and Ivy League education
Mangione was born and raised in Maryland and has links to San Francisco and Hawaii.
His social media lists him as being from Towson, a well-to-do area to the north of the city of Baltimore.
He is the grandson of a wealthy property developer and philanthropist and the cousin of a current Maryland state legislator.
He attended Gilman School – a private all-boys school in Baltimore. The school’s annual fees are up to $37,690 (around £29,000) and it boasts alumni including NFL stars and former senators.
After graduating in 2016, Mangione went to the University of Pennsylvania, one of America’s elite Ivy League schools.
According to his social media, he studied computer science and launched a group named UPGRADE (UPenn Game Research and Development Environment).
A university spokesperson said he earned undergraduate and graduate degrees there.
He later co-founded his own computer game company, which focused on small, simplistic games.
Image: Mangione went to a prestigious Ivy League university. Pic: LinkedIn
‘No complaints – a great guy’
According to his LinkedIn page, Mangione moved to California in 2020 and worked for the car-buying website TrueCar. The firm’s boss said he left last year.
Mangione currently lists himself as from Honolulu on LinkedIn, with pictures on Instagram showing him on the Hawaiian island.
In the first half of 2022, he reportedly lived at Surfbreak, a co-living space aimed at remote workers in Honolulu’s Waikiki neighbourhood.
“Luigi was just widely considered to be a great guy. There were no complaints,” Josiah Ryan, a spokesperson for Surfbreak’s owner, told the AP news agency.
“There was no sign that might point to these alleged crimes they’re saying he committed.”
Mr Ryan said Mangione left to get surgery on the US mainland for chronic back pain he suffered from since childhood.
Document reveals back condition
Mangione wrote about his health issue online, saying he has spondylolisthesis – a condition where one of the bones in the spine slips forwards.
He details the severity of his “injury” as “low grade two” and goes into fitness goals, diet advice and notes about the condition.
Image: The suspect’s notes say he has back condition spondylolisthesis
Image: His X banner image shows a back X-ray
It’s unclear if the condition is linked to the motive, which police have not publicly identified, but it gives context about his health issues.
Analysis of his Goodreads profile also shows he read books including Crooked: Outwitting The Back Pain Industry and Getting On The Road To Recovery, and Why We Get Sick: The Hidden Epidemic At The Root Of Most Chronic Disease – And How To Fight It.
A banner image on his X account also features an X-ray of a lower back with screws.
Law enforcement officials told NBC News they are looking at whether the X-ray is Mangione’s or from a relative and whether it’s connected to the shooting.
‘Violence is necessary to survive’
Mangione appears to have had an active social media presence.
His X account regularly shared and reposted pieces about topics such as artificial intelligence (AI), philosophy, and the future of humanity.
His Goodreads account also gave a four-star review to Industrial Society And Its Future – by notorious US terrorist Theodore Kaczynski.
The piece, which rails against technological advancement, became known as the Unabomber Manifesto after its author began a mail bombing campaign which lasted nearly 20 years.
Three people were killed and dozens were injured before Kaczynski’s arrest in 1996.
The Goodreads review said: “When all other forms of communication fail, violence is necessary to survive. You may not like his methods, but to see things from his perspective, it’s not terrorism, it’s war and revolution.
“‘Violence never solved anything’ is a statement uttered by cowards and predators.”
Image: Luigi Mangione. Pic: Facebook
Why are some calling Mangione a ‘hero’?
A search of social media sites such as Reddit reveals a thread of people who are sympathetic to the suspect.
Highly rated comments on the site include: “Screw the McDonald’s employee that ratted him out” and “Only a matter of time till shirts with #FreeLuigi start popping up”.
To many, these are shocking comments about someone accused of carrying out a cold-blooded killing. But what’s behind them?
Many in the US pay thousands in expensive insurance premiums to cover themselves and their family, while others rely on the Medicare federal insurance programme.
Support for Mangione appears to come from resentment over this and accusations that companies go to great lengths to avoid paying for treatments in order to maximise their profits.
“He got charged with murder quicker than insurance companies deny claims”, said a comment on Reddit with nearly 7,000 likes.
One post that went viral on X before the suspect’s arrest was from Anthony Zenkus, a Columbia University professor.
He wrote: “We mourn the deaths of the 68,000 Americans who needlessly die each year so that insurance company execs like Brian Thompson can become multimillionaires.”
Image: Police shared this picture of the suspect following the shooting. Pic: NYPD
A chart shared widely on X claims to show denial rates by UnitedHealthcare exceed those of competitors, using data from consumer finance website ValuePenguin. This is consistent with publicly available data from 2023 analysed by Sky News.
Other people online appear to be angry about what they say is the disparity between the resources put into Mr Thompson’s case and how less well-off people are treated.
One comment on Reddit with 4,000 likes says: “The murdered guy in death, like in life, is still sucking up a huge undeserved and unwanted portion of resources.
“How many underprivileged people’s murders are going unsolved because NYPD and the feds are spending millions on this overpaid, rich, morally questionable millionaire’s murder.”
Arrested in McDonald’s with ‘ghost gun’
Mangione was detained in a Pennsylvania McDonald’s after a five-day search, carrying a gun that matched the one used in the shooting and a fake ID, police said.
He was arrested in Altoona, around 230 miles (370km) west of New York, after a tip-off from a McDonald’s employee who recognised him from the police appeals.
Mangione also had a fake New Jersey ID matching one used by the suspect to check into a hostel before the killing, said New York police commissioner Jessica Tisch.
He was found carrying a “handwritten document” that Ms Tisch said “spoke to both his motivation and mindset”.
Joseph Kenny, New York’s chief of detectives, said it appeared to show “some ill-will towards corporate America”.
Pennsylvania prosecutor Peter Weeks said Mangione was found with a passport and $10,000 (£7,840) – $2,000 of it in foreign currency.
‘Message’ on bullets
Brian Thompson, 50, was chief executive of UnitedHealthcare – the fourth-largest public company in the US behind Walmart, Amazon, and Apple – and was paid about $10m (£7.8m) a year.
It’s the largest provider of Medicare Advantage plans and manages insurance for employers and state and federally funded programmes.
Mr Thompson – who was married with two sons – was shot on 4 December as he was walking to a New York hotel where his company was holding an investors’ conference.
Image: CCTV showed a person shooting Mr Thompson from behind. Pic: NYPD/Reuters
As Mr Thompson walked towards the Hilton hotel on Sixth Avenue, a gunman appeared behind him from between parked cars.
He was shot in the back and calf and died from his injuries.
The words “defend”, “deny”, and “depose” were written on the cases of bullets found at the scene – similar to the title of a book that criticises health insurance companies.
Mr Thompson’s wife said he was an “incredibly loving father to our two sons” and a “loving, generous, talented man who truly lived life to the fullest”.
UnitedHealthcare called him a “highly respected colleague and friend to all who worked with him”.