Nvidia Corp. shares fell 4.8% on Monday, marking the third consecutive negative session and putting the stock in correction territory with a decline of 12% over the past three days. This sell-off also impacted other chipmakers, as the Philadelphia Stock Exchange’s semiconductor index fell as much as 2.2% on the same day. Companies such as Broadcom Inc., Taiwan Semiconductor Manufacturing Co., and Qualcomm Inc. all saw decreases of at least 2%.
The recent drop in Nvidia shares caused the company to lose more than $400 billion in market capitalization, putting it back below the $3 trillion threshold and below Microsoft Corp. and Apple Inc. in size. Despite this decline, Nvidia is still up over 140% this year and is the second-best performer in the S&P 500 index constituents, behind Super Micro Computer Inc.
Investors have been attracted to Nvidia due to the high demand for its AI processing chips. However, concerns have been raised about the extent of Nvidia’s rally, as the stock is trading at nearly 23 times estimated sales over the next 12 months, making it the most expensive in the S&P 500 by this metric. Nonetheless, Wall Street remains bullish on Nvidia, with nearly 90% of analysts recommending buying the stock and an average price target suggesting a potential upside of around 10% from current levels.
While the momentum in Nvidia stock and the AI sector overall has been strong, some investors may be experiencing “AI fatigue” or becoming more concerned about index concentration. Despite this, many analysts and portfolio managers believe in the long-term growth potential of Nvidia and the broader AI industry.
In conclusion, Nvidia’s recent decline has put the stock under pressure, but it remains a top performer in the market. The company’s high valuation has raised some concerns, but overall sentiment on Wall Street is positive. Investors will be watching closely to see how Nvidia and the AI sector as a whole continue to perform in the coming months.
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https://finance.yahoo.com/news/nvidia-enters-correction-territory-slump-154134868.html