Think you had a bad day? It's nothing compared to the drop the past three trading days by S&P 500 stock Nvidia.
Shares of the AI poster child dropped 6.3% Monday, capping off a 12% drop in three days. That might not sound like much until you consider what that means for a company valued at $3 trillion. In just three days, the company lost $400 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 484 companies in the S&P 500 are worth individually — or 96% of the index. It's almost like a United Parcel Service or Citigroup 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, Microsoft and Apple, 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. Even the average 12-month price target is 129.38 a share, indicating a 9% rise.
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 three-day $400 billion drop through June 24
| Company | Ticker | Sector | Now ($ billion) |
|---|---|---|---|
| Procter & Gamble | Consumer Staples | $396.7 | |
| Oracle | Information Technology | $383.8 | |
| Costco Wholesale | Consumer Staples | $374.9 | |
| Johnson & Johnson | Health Care | $359.4 | |
| Home Depot | Consumer Discretionary | $349.1 | |
| Merck | Health Care | $335.4 | |
| Bank of America | Financials | $313.9 | |
| AbbVie | Health Care | $305.3 | |
| Chevron | Energy | $292.9 | |
| Netflix | Communication Services | $287.6 |
