A single-night plunge wiped out 1.535 trillion yuan! Will chip giant NVIDIA follow in Tesla's footsteps?

Global chip giant NVIDIA can't hold on anymore.

On Friday, the tech stock leader NVIDIA plunged 10%, with its total market cap falling below the $2 trillion mark, losing over $212 billion in a single day, equivalent to approximately RMB 1.535 trillion.

This sharp drop ended NVIDIA's upward trend since October 2023. Reportedly, this also set a record for the largest single-day market cap loss by a U.S. stock.

In fact, besides NVIDIA, other U.S. tech stocks also saw significant market cap losses this week. For example, Apple lost $178 billion, Microsoft shed $169 billion, and Amazon dropped $118 billion...

This shows that the decline isn't just about one company but reflects the overall high valuation of U.S. stocks. NVIDIA's drop also sends a signal. So, why did NVIDIA experience such a steep fall? Does it mark the end of the AI boom?

Kan Jian Finance believes NVIDIA's sharp decline was expected, as a similar scenario played out with Tesla.

After 2022, the global new energy industry's hype faded, and Tesla, as the leading electric vehicle company, began to fall from grace. Previously, Cathie Wood, dubbed the "female Buffett," gained fame by heavily betting on Tesla. However, due to her excessive Tesla holdings, her fund's performance has been lackluster in recent years as Tesla's stock declined.

More importantly, Elon Musk once became the world's richest person due to Tesla's stock surge, even surpassing a $300 billion net worth. But as Tesla's stock fell, he lost that title.

Judging by the current U.S. stock market, after 2023, NVIDIA almost replicated Tesla's trajectory due to the AI hype, and its future fate is likely similar. Currently, Tesla is facing overcapacity and has announced a 10% workforce reduction.

As the new global hype, AI is still in the storytelling phase, and large-scale model applications are far from full commercialization. Thus, we believe the global AI sector may enter a bubble-bursting phase.

According to ASML's Q1 earnings report, the global lithography giant's revenue was €5.29 billion, down 22% YoY and 27% QoQ, while net profit was €1.224 billion, a 40% QoQ drop.

After the report, ASML's market cap lost over $27.2 billion in a single day.

ASML's Q1 performance decline has negative implications for the entire industry. Affected by this, NVIDIA's stock also fell that day.

NVIDIA's forward P/E ratio now exceeds 64x, and with declining performance from semiconductor giants like TSMC and ASML, NVIDIA's growth may slow, contributing to its stock plunge.

Long-term, the global AI boom has driven rapid demand for computing power, making NVIDIA's surge understandable. However, like the metaverse, which faced slow commercialization and was eventually shelved by many companies, AI's full-scale commercialization remains distant. Despite GPT's progress, current large-model costs far outweigh revenue potential. Thus, we expect the AI sector to enter a bubble-bursting phase in the next 2-3 years, with NVIDIA's value correcting—this steep drop is a signal of that.