Nvidia shares fell 3.39% on July 13, extending a slide that has now erased roughly $1 trillion in market value since the stock's record high on May 14 -- one of the largest sustained drawdowns for any single company in market history, made more notable by the fact that it's happening at a company whose underlying revenue growth hasn't visibly cracked. NVDA now trades around 18 times forward earnings, below the S&P 500's roughly 21x multiple and the cheapest the stock has traded relative to the broader index since early 2019.
The drivers are a mix of macro and company-specific. Hawkish signals from the Federal Reserve have raised cost-of-capital concerns across high-growth technology broadly, hitting high-multiple growth names harder than value stocks almost by definition. But the more Nvidia-specific driver is reporting that major hyperscale cloud customers -- the same companies whose capex has been the core bull case for the stock -- are accelerating a shift toward custom ASIC chips designed to reduce their reliance on third-party hardware like Nvidia's GPUs.
That ASIC shift isn't hypothetical: Meta's own MTIA-based "Iris" chip, designed with Broadcom and manufactured by TSMC, is set to enter production in September and is explicitly intended to help scale Meta's own compute capacity, reducing (at the margin) how much of that scaling has to run through Nvidia purchases. Google, Amazon and Microsoft have all pursued similar in-house silicon programs for years with varying degrees of success; what's changed is that investors now appear to be pricing in meaningfully faster hyperscaler ASIC adoption than they were even a few months ago.
Additional pressure comes from gross-margin concerns tied to higher memory costs -- the same high-bandwidth memory supply crunch that helped drive SK Hynix's record US IPO earlier this year -- alongside increasingly crowded institutional ownership of NVDA and specific criticism that Nvidia is using its substantial cash generation for vendor financing arrangements with its own customers rather than returning capital through buybacks or dividends, a structure some investors see as propping up demand rather than reflecting organic order strength.
For infrastructure investors, the drawdown is a real-time test of whether Nvidia's moat -- its CUDA software ecosystem, training-cluster performance lead and manufacturing scale advantage -- is durable enough to absorb genuine hyperscaler ASIC competition without a lasting hit to market share, or whether this is the start of a multi-year share shift toward vertically integrated chip strategies at the largest AI buyers.
The bear case for the selloff itself: a trillion-dollar drawdown driven partly by macro rate fears and partly by ASIC headlines that haven't yet shown up in actual revenue impact may be overpricing a real but still-early competitive shift. What to watch next: Nvidia's next quarterly earnings call for any disclosed impact from hyperscaler ASIC adoption on order volumes, and whether the stock's newly compressed multiple attracts value-oriented buyers even as growth investors rotate out.