Nvidia has lost more than $500 billion in market value since Thursday after the company briefly became the world's most valuable company. The chipmaker's shares fell by nearly 7 percent on Monday.

On Monday, Nvidia's market value fell to 2.91 trillion dollars, a decline of about 550 billion dollars from its peak on Thursday. Last week, the company had surpassed Microsoft and Apple to become the most valuable publicly traded company in the world, but has since dropped to third place.

Nvidia, whose price gains alone were responsible for about a third of the S&P 500's rise in 2024, has now fallen about 16 percent from its intraday high of $140.76 last Thursday.

In recent weeks, concerns regarding Nvidia's influence on the broader index have intensified. Some analysts have warned that a major sell-off in the chip manufacturer could trigger a wider market downturn.

If Nvidia corrects sharply in the coming months, it will be very difficult for the [S&P 500] to continue rising," said Barry Bannister, chief equity strategist at Stifel. "And Nvidia will slow down," he added, referring to the company's previously strong profit growth.

The decline on Monday followed disclosures from Friday that Nvidia's CEO and co-founder, Jensen Huang, sold almost $95 million worth of shares in the days just before and after the company became the most valuable company in the world. The sales were part of a previously planned "Rule 10b5-1" sales plan set up in March, according to filings.

Nvidia declined to comment on the sales.

The rapid rise of the stock has prompted some skeptical observers to draw comparisons with Cisco, the network equipment provider that briefly became the world's most valuable company in March 2000 at the height of the dot-com boom. Cisco lost about 80 percent of its value the following year when the bubble burst and telecommunications companies cut their spending on broadband infrastructure.

Nvidia's decline weighed on the broader chip sector, with the PHLX Semiconductor Index falling by nearly 7 percent over the last three trading sessions. The tech-heavy Nasdaq Composite fell by 1.1 percent on Monday.

Nvidia weighed on the broader stock market on Monday, with the blue-chip S&P 500 closing 0.3 percent lower despite gains in most sectors. In contrast, the small-cap Russell 2000 index, which has lagged behind the large-cap indices in recent months, rose by 0.4 percent.

Manish Kabra, head of U.S. equity strategy at Société Générale, said Nvidia's sell-off on Monday was "a very healthy development for the market.

‘Either the market rally will spread, or we are creating a bubble [in technology stocks] that we don't yet have,’ said Kabra.