NVIDIA Crash Shows Us, Their Confidence Is Shot!
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Two days ago, NVIDIA made history once again, by suffering the largest single-day loss of market value ever recorded, erasing nearly $600 billion in market capitalization. To put that into perspective, in 1980, this figure would have equaled 100% of US national debt and around 60% of the entire S&P 500 index. In 2025, it surpasses the total value of all the gold held in ETFs worldwide. In percentage terms, NVIDIA’s stock dropped 17% from open to close. That such an immense loss stemmed from a decline in just one company highlights just how concentrated today’s markets have become.
We've all heard of how the ‘Magnificent 7’ now account for 35% of the S&P 500, but we have yet to see the full consequences of this concentration in a true market unwind. My guess? When it happens, it will be brutal. With so much riding on so few names, and so many ETF’s and pension funds holding these stocks, it won’t take much selling to trigger a major collapse. While NVIDIA has since rebounded, I believe this event will one day be viewed as a pivotal moment in something much bigger—and far more destructive. The rebound? Well, I will comment on that in a moment, but first, what caused the crash to begin with?
The immediate catalyst, we are told, was an announcement from a Chinese AI company, DeepSeek, claiming it could achieve far more for far less than American AI firms. The absurdity of this is worth noting—DeepSeek itself relies on NVIDIA chips. Yet, the market interpreted the announcement as a signal that AI companies will soon require far fewer chips, thanks to the efficiencies DeepSeek claims to have developed.