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.
Israel’s prime minister has nominated Donald Trump for the Nobel Peace Prize.
Benjamin Netanyahu made the announcement at a White House dinner, handing over the letter for the US president to read.
“Coming from you in particular, this is very meaningful,” Mr Trump said.
The Israeli leader said Mr Trump was “forging peace as we speak, and one country and one region after the other”.
Organisers award the prize to the person who does the most for “fraternity between nations, for the abolition or reduction of standing armies and for the holding and promotion of peace congresses”.
Image: Benjamin Netanyahu handed Donald Trump the Nobel nomination letter. Pic: AP
Mr Trump took credit for stopping Iran and Israel‘s “12-day war” last month, announcing it with fanfare on Truth Social, and the ceasefire has so far held.
The president has claimed US strikes obliterated Iran’s purported nuclear weapons programme – and that the country now wants to restart negotiations.
“We have scheduled Iran talks, and they want to,” Mr Trump told reporters on Monday. “They want to talk.”
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Iran hasn’t confirmed the move, but its president told US broadcaster Tucker Carlson he believes his country can resolve differences with the US through dialogue.
Masoud Pezeshkian also said Iran would be willing to resume cooperation with the UN nuclear watchdog.
However, he said full access to nuclear sites wasn’t yet possible as US strikes had damaged them so badly.
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0:44
Netanyahu arrives in US for ceasefire talks
Away from Iran, fighting continues in Gaza and Ukraine.
Mr Trump famously boasted before his second stint in the White House that he could end the Ukraine war in 24 hours.
Critics have also claimed Vladimir Putin is “playing” his US counterpart and that he has no intention of agreeing a ceasefire.
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Russia bombards Ukraine with drones and missiles
However, Mr Trump could try to take credit for progress in Gaza if – as he’s suggested – an agreement on a 60-day ceasefire is done this week.
Indirect negotiations with Hamas are taking place that could lead to the release of some of the remaining 50 Israeli hostages and a surge in aid to Gaza.
The White House said Middle East envoy Steve Witkoff is travelling to Qatar this week to try to seal the agreement.
Whether a temporary pause could open a path to a lasting peace remains uncertain, with the two sides’ criteria for peace still far apart.
Mr Netanyahu has said Hamas must surrender, disarm and leave Gaza – something it refuses to do.
He also told reporters on Monday that the US and Israel were working with other countries who would give Palestinians “a better future” – and indicated those in Gaza could move elsewhere.
“If people want to stay, they can stay, but if they want to leave, they should be able to leave,” he added.
“We’ve had great cooperation from… surrounding countries, great cooperation from every single one of them. So something good will happen,” Mr Trump said.
The president was widely criticised earlier this year when he suggested resettling Gaza’s population to countries such as Jordan and Egypt and turning it into the “Riviera of the Middle East”.
Human rights groups said the plan amounted to ethnic cleansing and most Gazans said they would never consider leaving.
At least 104 people have died in the flash floods that have left a trail of destruction across Texas.
Kerr County Sheriff’s Office said the number of bodies found in the area had risen from 75 to 84 – including 56 adults and 28 children.
The have been seven fatalities in Travis County, six in Kendall County, four in Burnet County, two in Williamson County and one in Tom Green County.
Earlier, White House press secretary Karoline Leavitt warned that “the situation on the ground remains dangerous” and that there “could be additional public safety threats with additional incoming heavy rain”.
Image: A view inside a cabin at Camp Mystic after the flooding. Pic: Ronaldo Schemidt/AFP via Getty Images
The floods that first struck on Friday have wreaked havoc and left people in a state of grief – with 27 of the confirmed deaths having taken place at a girls’ summer camp in Kerr County.
Among those killed at Camp Mystic were Renee Smajstrla and Sarah Marsh, both eight, Eloise Peck and Lila Bonner, both nine,and the camp’s director Richard Eastland.
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A photo has now emerged showing the inside of the camp on Saturday after the waters hit.
At least 41 people are still missing in the state – including 10 girls from Camp Mystic.
Image: Renee Smajstrla, eight, died in the flash floods at Camp Mystic, Texas. Pic: Family handout
Image: Sarah Marsh, eight, died in the flash floods at Camp Mystic, Texas. Pic: Family handout
In her news conference, Ms Leavitt criticised people who have claimed the Trump administration’s cuts to the National Weather Service (NWS) have played a role in the worsening the disaster.
It comes after Texas officials criticised the NWS by claiming it failed to warn the public about the impending danger.
Meanwhile, Senate Democratic Leader Chuck Schumer asked the Department of Commerce’s acting inspector general on Monday to probe whether staffing vacancies at the NWS’s San Antonio office contributed to “delays, gaps, or diminished accuracy” in forecasting the flooding.
The NWS did not immediately respond to a request for comment on Mr Schumer’s letter, but earlier defended its forecasting and emergency management.
Image: Flooding near Kerville, Texas. Pic: US Coast Guard/AP
Ms Leavitt has told reporters that claims Mr Trump was responsible for any issues related to the flash floods response were “depraved and despicable”.
“It is not [a political game], it is a national tragedy,” she said.
The press secretary also claimed, in relation to some NWS offices being reportedly understaffed, that one place actually had “too many people”.
“Any person who has deliberately lied about the facts around the catastrophic event, you should be deeply ashamed,” she said.
Image: Rescuers at Camp Mystic along the Guadalupe River in Texas after a flash flood swept through the area. Pic: AP
Image: Members from Texas Game Wardens of the Law Enforcement Division works following flash flooding, in Kerrville, Texas. Pic: Reuters
She also said that Mr Trump was going to visit Texas “later in the week”.
Previously, Mr Trump said it was likely he would visit on Friday.
Image: Car is wedged in the ground following deadly floods in Texas
Image: Karoline Leavitt in the press briefing room
Texas Senator Ted Cruz spoke at a news conference and said: “Texas is grieving right now, the pain, the shock of what has transpired these last few days has broken the heart of our state.
“Those numbers [the number of dead] are continuing to go up… that’s every parent’s nightmare, every mum and dad.”
Image: A view inside a cabin at Camp Mystic after the flooding. Pic: Ronaldo Schemidt/AFP via Getty Images
Image: Damaged vehicles and debris are seen roped off near the banks of the Guadalupe River after flooding in Ingram, Texas. Pic: AP
He said he had picked up his own daughter from a camp in the area last week.
Mr Cruz added: “You know what I’d do? What I did when this happened? Just go hug your kids.
“Because I’ve got to tell you, I hugged my girls with tears in my eyes.”
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1:04
Texas flooding: Aerial footage of rescues
Dalton Rice, the city manager of Kerrville in Kerr County, was asked whether evacuation warnings could have been issued earlier.
He said: “It’s very tough to make those calls because we also don’t want to cry wolf.
“You know, we want to make sure that we activated [it] at the right time.”
He added: “We had first responders getting swept away, responding to the first areas of rainfall. That’s how quick it happened.
“They were driving to these areas and one of them got swept off the road.”
Videos and satellite imagery show how quickly Donald Trump’s detention centre in Florida has been constructed – as experts suggest the design of the site is flawed and will compromise the safety of people being held there.
Sky News’ Data and Forensics team has verified footage posted on social media that shows water covering the ground near electricity cables during a storm as the first detainees were due to arrive.
The Florida Division of Emergency Management (FDEM), run by Governor Ron DeSantis, posted on X that detainees were at the site on 3 July just before 1pm local time (6pm UK time).
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Donald Trump held a tour of the facility on 1 July that took journalists around “Alligator Alcatraz”. Its name is a reference to both the local reptile population and the former maximum-security Alcatraz Federal Penitentiary in San Francisco Bay, California.
The tour showed the rapid construction of the centre, designed to accommodate up to 3,000 detainees. The purpose of the site is to house individuals detained by US Immigration and Customs Enforcement (ICE).
James Uthmeier, Florida’s attorney general, posted on X: “And in just a week, Alligator Alcatraz was built.”
Political commentator Benny Johnson, who was on the tour, praised the eight-day turnaround. “I don’t think anyone realises how impressive Alligator Alcatraz is,” he said.
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Amid those positive comments, videos emerged highlighting flooding in the centre, with electricity cables covered with water on the day of the tour.
The flooding was said to have been caused by a small storm. However, the state department claims the structures and tents can withstand category two hurricanes, reaching 110mph winds.
FDEM spokesperson Stephanie Hartman wrote in a statement that “vendors had tightened any seams at the base of the structures that allowed water to come in during the storm”. She described the water intrusion as minimal.
Steff Gaulter, a Sky News meteorologist, said: “In the last 10 years, we’ve seen 13 hurricanes that have hit Florida. Seven of them have been category three or higher.
“As well as needing to know how strong these storms are as they come, it’s also very unpredictable, their track can change at the last minute.”
The American Society of Civil Engineers (ASCE) and the Structural Engineering Institute (SEI) have said structures in risk category two – which Alligator Alcatraz falls under – need to withstand 121mph wind gusts.
If the housing tents exceed 300 occupants per tent, the guidelines go up to 167mph.
Ms Gaulter explained: “You don’t necessarily need a hurricane in order to see a gust of wind over 100mph. In the lowest category of hurricane, category one, the range of winds would be between 74mph and 95mph. But even in that category, you can easily get a gust of wind up to 120mph.”
Dr Patrick McSharry, Professor at Carnegie Mellon University and former head of catastrophe risk financing at Oxford University, told Sky News that in a hurricane “there’s no way that a tent is going to be in any way something that you would advise someone to be in”.
“It’s more the case of having a plan in place that can be mobilised really fast to get people out of that dangerous situation.”
The site is also located in a hurricane-prone region as defined by ASCE.
Discussing building regulations, Dr McSharry said: “We’re dealing here potentially with human lives so it’s an even more sensitive calculation I think that needs to be made.”
Image: The blue pin marks Alligator Alcatraz. The key shows average wind speeds. Credit: ASCE.
Sky News put these concerns to Ron DeSantis and the Florida state department, but did not receive responses.
White House spokeswoman Abigail Jackson told Sky News: “Alligator Alcatraz is a state-of-the-art facility that will play a critical role in fulfilling the president’s promise to get the worst criminal illegal aliens out of America as fast as possible.
“President Trump is grateful to partner with [Homeland] Secretary [Kristi] Noem and Ron DeSantis on this important project.”
Satellite imagery obtained by Sky News shows the rapid construction of the centre, which was formerly Dade-Collier Training Airport.
Five days after the centre was announced by Florida’s attorney general James Uthmeier, more than 60 new trailers can be seen on the right-hand side of the runway.
Satellite imagery obtained by Sky News also shows that from 24 June to the opening date on 1 July, more than seven large housing tents were put up at the site.
Image: Satellite imagery showing the site on 24 June. Credit: Maxar
Image: An aerial photo of the site on 1 July. Credit: AP
The site is reportedly set to open with 3,000 beds, expanding to 5,000 by early July.
It is also reported that the site will cost an estimated $450m (£330m) per year to operate, with a bed costing $245 (£180) per day.
The bill is reported to be covered by the state of Florida, which plans to get money back from the Federal Emergency Management Agency (FEMA) and Department of Homeland Security (DHS).
Tessa Petit, director of the Florida Immigrant Coalition, told Sky News: “It was constructed too [quickly]. This is a sign that we’re seeing a disaster [waiting to] happen as we look at it.
“Usual detention centres come up with, you know, their bricks and mortar, right? This is not bricks and mortar. This is just tents and mobile homes that are assembled on an airstrip.”
“There’s a detention of immigrants in a place that has been in the past ravaged by hurricanes and we’re getting into hurricane season,” Ms Petit added.
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She is concerned that medical support and sanitary provisions, like a sewage system, will not have been properly installed.
“You can’t build a sewage system that can sustain 3,000 people in eight days. You can’t dig in the Everglades. So, what are going be the additional sanitary conditions?” she said.
There are also sustainability concerns about the site.
The Centre for Biological Diversity has filed a lawsuit in US District Court to protect the Florida Everglades. They state it is “a reckless plan to build a massive detention centre for people caught in immigration raids”.
Tania Galloni, an attorney working with the Centre for Biological Diversity, stated the proposed plan “has not undergone the environmental review required by federal law, and the public has had no chance to provide feedback”.
The Data and Forensics team is a multi-skilled unit dedicated to providing transparent journalism from Sky News. We gather, analyse and visualise data to tell data-driven stories. We combine traditional reporting skills with advanced analysis of satellite images, social media and other open source information. Through multimedia storytelling we aim to better explain the world while also showing how our journalism is done.