Nvidia's stock price experienced a significant drop of nearly 10% on Tuesday, marking the largest single-day decline in market value for a US company.

This decline reflects a weakening of investor optimism about artificial intelligence.

The shares of this AI heavyweight fell by 9.

5% to $108 each on Tuesday, resulting in a loss of $279 billion in market capitalization, according to Reuters.

This event represents the largest single-day fall in market value for a US company, suggesting that investors are becoming more cautious about the emerging AI technology that has driven much of this year's stock market gains.

Nvidia's shares have decreased by 14% over the three sessions since it reported earnings that did not meet high expectations.

The stock price had almost tripled in 2024, reaching a record high close in July.

However, the recent losses have left the stock up by 118% year-to-date (YTD).

Nvidia's record one-session loss in market capitalization was greater than the $232 billion decline suffered by Facebook-owner Meta Platforms on February 3, 2022, when the social media company issued a dismal forecast, according to LSEG data, Reuters reported.

Following Nvidia's quarterly earnings report last week, the mean analyst estimate for annual net income through January 2025 has increased to $70.

35 billion from about $68 billion before last week's report.

Despite the increased earnings estimates, the losses in Nvidia's share price have resulted in the chipmaker now trading at 34 times expected earnings, down from over 40 in June and in line with its two-year average, Reuters reported.

A selloff was also observed in broader markets and other technology stocks on Tuesday following tepid economic data.

The PHLX chip index plummeted by 7.

75%, its biggest one-day drop since 2020.

The weakness in chip stocks was accompanied by wide declines on Wall Street, with the Nasdaq dropping 3.

3% and the S&P 500 down 2.

1%.

In a separate development, Bloomberg News reported on Tuesday that the US Department of Justice has sent a subpoena to Nvidia as it deepens its probe into the company’s antitrust practices.

The antitrust watchdog had previously delivered questionnaires and has now sent legally binding requests to Nvidia, the report said, citing people familiar with the investigation.

It added that other companies had also received subpoenas.

Officials are concerned that the chipmaker is making it harder to switch to other suppliers and penalizes buyers that do not exclusively use its artificial intelligence chips, the report said.

“Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them,” a spokesperson for the company said.