Shares of Nvidia and Tesla suffered significant losses on Wednesday, with both companies dropping nearly 6% in market value. This sharp decline played a major role in dragging down key stock indices, as the S&P 500 fell over 1% and the tech-focused Nasdaq dropped more than 2%. The selloff highlights increasing investor worries about economic conditions and policy changes, particularly regarding trade tensions and government regulations.
Nvidia and Tesla Lose $222 Billion Amid Trade Tensions and Market Volatility
The losses in Nvidia and Tesla translated to a staggering $222 billion decrease in their combined market capitalization, exceeding the total worth of General Electric, one of the largest U.S. companies. This dramatic plunge underscores the volatility of these stocks, which have often reacted sharply to shifts in economic policies. Given their leadership in AI and electric vehicles, both firms are particularly sensitive to global market conditions and geopolitical developments.

The stock declines coincided with reports that President Donald Trump’s administration plans to introduce new tariffs on car imports while tightening restrictions on Chinese tech firms. These developments have raised fears of retaliatory measures from China, a crucial market for both Nvidia and Tesla, accounting for over 10% of their revenues. The renewed trade tensions have also triggered a rise in market volatility, as reflected by an 8% spike in the CBOE Volatility Index (VIX), often referred to as Wall Street’s “fear gauge.”
Broader Market Decline and Billionaire Losses Amid AI and EV Uncertainty
The downturn wasn’t limited to Nvidia and Tesla alone—other automakers, including General Motors, Rivian, and Stellantis, saw their stock prices decline by at least 2%. Meanwhile, Nvidia’s chip-making competitors, such as Advanced Micro Devices, Broadcom, and Taiwan Semiconductor Manufacturing Company, suffered losses exceeding 4%. This widespread slump suggests that investors are reassessing the growth prospects of AI and EV-related stocks amid increasing regulatory and economic uncertainty.
The market downturn significantly affected the wealth of tech leaders Elon Musk and Jensen Huang. Musk, Tesla’s CEO and the world’s richest person, saw his net worth fall by $11 billion to $346 billion, while Nvidia CEO Huang lost $6 billion, reducing his fortune to $100 billion and lowering his ranking among the world’s wealthiest individuals.
Despite their companies’ remarkable stock gains in 2023 and 2024, Nvidia and Tesla have struggled in 2025, with their shares down 15% and 33% year-to-date, respectively. Concerns over Chinese AI advancements impacting Nvidia’s chip demand and Tesla’s declining vehicle registrations have further weighed on investor sentiment.