Nvidia stock has been reported to have declined by 13%, falling three times in a row from its peak after becoming the most profitable company.
The company shares fell 6.7% on Monday which wiped $430 billion off its value. Now worth $2.91 trillion, the chip maker has rolled back to third place globally, behind Microsoft and Apple which have a market cap of $3.33 trillion and $3.19 trillion respectively.
Also, the chip maker recent losing streak saw it become the fourth-buggest loser in the S&P 500 on Monday. With the decline in Nvidia’s valuation, it has sparked broader market concerns, signalling that investors excitement over may be cooling off after eye-popping gains in the stock.
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Speaking on the company’s recent decline in valuation several analyst have shared their view on the recent development.
Jochen Stanzl, chief market analyst at trading platform CMC Markets, told CNN,
“What we see with Nvidia is typical volatility, which is expected when a stock rises as
quickly as Nvidia’s did. A lot of good news has been priced in. Now investors have started to
take profits and they seem to prefer selling stocks with the best year to-date performance.”
For Ari Wald, head of technical analysis at Oppenheimer, he said the longer-term trend is more important than any specific level for
Nvidia and it remains strong with the stock still trading well above its 50-day moving average around $101 and 1.00-day moving average at $92.
“Typically major tops are a process, with several rounds of buying and selling and then price momentum creeps in and there’s a failure to hold key levels. We haven’t seen anything like that yet. This is just how Nvidia trades”, he added.
Research founder Ray Wang while speaking on CNBC’s Squawk Box on Monday said Nvidia’s upward trajectory is going to continue for the next 18-24 months, further disclosing that the decline in the company’s stock and share price is the perfect time to buy the dip.
Nvidia’s stock has been on a tear, soaring almost 139% over the past year. The company’s chips power Al systems, including generative Al, the technology behind OpenAl’s
ChatGPT that can create text, images and other media.
Notably, the chip maker is a member of the Magnificent Seven, the mega-cap tech companies whose shares greatly outperformed the broader US stock market rally last year. The S&P 500 index climbed 24.2% over 2023, compared with the average 111% rise in the stocks of the Magnificent Seven.
In a note published Monday, Deutsche Bank noted that, as a result of the seven stocks’
dominance, the US stock market is close to being the most concentrated in history. On
Tuesday, the bank wrote that the decline in Nvidia’s stock the previous day had “held down US equity returns more broadly.
Nvidia’s value has nearly tripled in the past despite the slump in valuation. The company has said that the demand for its prized AI graphics processing units (Gus) remains high. Later this year, the company will start shipping its next-generation AI chips called Blackwell, which some analysts expect could kick off another upcycle of significant growth.