Nvidia Corp. shares experienced a significant drop on Monday, entering correction territory after a three-day decline that wiped out around $430 billion in market capitalization. This marked the largest three-day loss in value for any company in history. The stock fell by 13% during this period, surpassing the 10% threshold for a correction. The sell-off also impacted other chipmakers, with the Philadelphia Stock Exchange’s semiconductor index falling by 3% on Monday.
As a result of the drop, Nvidia’s valuation fell below the $3 trillion threshold, moving it back below Microsoft Corp. and Apple Inc. in terms of market capitalization. The company had briefly held the title of the world’s largest action title the previous week. Despite the recent decline, Nvidia’s stock is still up by nearly 140% for the year, making it the second-best performer among S&P 500 index constituents.
Investors have been drawn to Nvidia due to the high demand for its chips in artificial intelligence processing. However, concerns about the stock’s valuation have been raised, as it trades at 21 times estimated sales over the next 12 months, making it the most expensive stock in the S&P 500 by this measure. Despite this, Wall Street analysts remain bullish on Nvidia, with nearly 90% of analysts recommending buying the stock.
Charlie Ashley, a portfolio manager at Catalyst Funds, highlighted the impressive momentum in Nvidia and other AI stocks, noting that he would not bet against them at this point. The stock had previously experienced a drop of about 20% earlier in the year but quickly rebounded to all-time highs.
Overall, the recent sell-off has raised concerns about the lofty valuation of Nvidia, but many analysts and investors remain optimistic about the company’s long-term prospects. The story will continue to unfold as market conditions evolve.
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https://finance.yahoo.com/news/nvidia-enters-correction-territory-slump-154134773.html
