In a turbulent day for the stock market, shares of artificial intelligence (AI) leader Nvidia (NASDAQ: NVDA) and electric vehicle giant Tesla (NASDAQ: TSLA) plummeted on Wednesday, wiping out a combined $222 billion in market value. The sharp sell-off came as investors reacted to President Donald Trump’s escalating trade tensions with China and the looming threat of new tariffs on car imports.
Nvidia and Tesla Lead Tech Sector Selloff
Nvidia and Tesla both saw their shares tumble nearly 6% during Wednesday’s session. The massive decline dragged down the broader market, with the S&P 500 falling over 1% and the Nasdaq Composite dropping more than 2%.
The market rout erased approximately $170 billion from Nvidia’s market capitalization and $52 billion from Tesla’s. The combined loss was greater than the entire valuation of General Electric (NYSE: GE), the 35th-largest publicly traded company in the U.S.
Trump’s Trade Policies Rattle Investors
The steep decline followed reports that the Trump administration is preparing to unveil a new slate of tariffs on car imports. This move comes on the heels of the administration blacklisting dozens of Chinese tech companies from receiving U.S. technology.
Both Nvidia and Tesla are particularly vulnerable to potential retaliatory trade actions, given their significant exposure to the Chinese market. China accounts for more than 10% of each company’s revenue, making the risk of trade restrictions a major threat to their financial performance.
The broader chip and EV sectors also suffered. Shares of rival automakers General Motors (NYSE: GM), Rivian (NASDAQ: RIVN), and Stellantis (NYSE: STLA) fell at least 2% each. Smaller chip competitors, including Advanced Micro Devices (NASDAQ: AMD), Broadcom (NASDAQ: AVGO), and Taiwan Semiconductor Manufacturing Company (NYSE: TSM), all saw declines of over 4%.
Wealth of Musk and Huang Takes a Hit
The massive sell-off didn’t just impact the companies’ market values—it also dealt a heavy blow to the personal fortunes of their billionaire CEOs.
Tesla CEO Elon Musk, the world’s richest person, saw his net worth plummet by $11 billion to $346 billion. Meanwhile, Nvidia CEO Jensen Huang lost $6 billion, reducing his fortune to $100 billion and knocking him from 12th to 15th place on Forbes’ real-time billionaires list.
A Brutal Year for AI and EV Giants
The latest plunge caps a challenging first quarter of 2025 for both Nvidia and Tesla. Despite their explosive stock market gains in 2023 and 2024, the companies have struggled in the new year.
Nvidia shares are down 15% year-to-date as investors worry that Chinese advances in generative AI could reduce demand for the company’s premium AI chips. Tesla stock has fared even worse, plunging 33% since the start of 2025. The EV maker has been battered by concerns over slowing demand, particularly in China, and the polarizing influence of Musk’s close ties to the Trump administration.
New vehicle registrations for Tesla have dropped a staggering 49% year-over-year through the first two months of 2025, raising alarms about its growth trajectory.
Market Outlook: More Volatility Ahead?
The massive sell-off in Nvidia and Tesla highlights the market’s growing unease over trade tensions and geopolitical instability. With Trump’s trade policies becoming more aggressive, investors are bracing for potential retaliatory actions from China, which could further hit U.S. tech and auto giants.
While both Nvidia and Tesla remain dominant players in their respective industries, the short-term outlook appears rocky. The combination of trade uncertainties, declining China sales, and rising competition in the AI and EV sectors could keep their stocks under pressure in the coming months.
Investors will be closely watching how both companies navigate the evolving trade landscape and whether they can maintain their leadership positions amid rising competition and geopolitical headwinds.
