Nvidia, a prominent AI chipmaker, recently became the most valuable company in the world, surpassing Apple and Microsoft. However, over the following days, its shares plummeted by 13%, leading to a loss of over $500 billion in market value and a drop to third place among the largest companies. Market analysts attribute this significant decline to profit-taking by traders looking to cash in on Nvidia’s previous meteoric rise, rather than signaling weakness in AI or the company itself.
Despite the recent pullback, Nvidia had seen a remarkable surge in its stock price, with a nearly 700% increase in two years. Even with the recent decline, the stock remains up by almost 150% since the beginning of 2024. The sharp rise in stock prices often triggers profit-taking, but analysts noted that the magnitude of the recent drop was because of the exceptionally rapid ascent of Nvidia shares.
The consensus among analysts is that the recent decline does not signal a fundamental flaw in the AI sector or Nvidia’s business performance. In fact, last month, Nvidia reported impressive earnings, with a 262% increase in revenue and over 600% growth in profits. The company’s latest chip, Blackwell, has garnered significant interest from tech giants like Amazon, Google, and Microsoft, further solidifying Nvidia’s position in the market.
While some analysts see the recent dip in Nvidia’s stock price as an opportunity for investors to buy at a favorable price, others caution against jumping in too soon. Feinseth believes that the drop will attract renewed interest in Nvidia, potentially driving up the price, and sees it as a buying opportunity. On the other hand, Sosnick advises waiting for a further price drop before considering investing in Nvidia, citing the risks of continued volatility and relatively modest potential gains at the current price level.
Despite the recent turbulence in Nvidia’s stock price, early trading on Tuesday showed signs of recovery, with the stock gaining almost 5% by midday. The consensus among analysts is that while the recent drop was notable, it may represent an opportunity for investors to re-enter the market at a lower price. Overall, the long-term prospects for Nvidia and the AI sector remain strong, and the recent decline is viewed as a temporary setback amid the broader trend of growth in the industry.
Article Source
https://abcnews.go.com/amp/Business/nvidias-stock-price-dropped/story?id=111398609
