Nvidia shares saw a strong rebound on Tuesday after falling for three consecutive days, resulting in a significant loss of market value. The company had recently surpassed Microsoft to become the most valuable public company on Wall Street but experienced a 13% drop, the worst since 2022. Due to its large size, Nvidia’s stock movements have a significant impact on the S&P 500 and other indices.
The stock had surged more than 1,000% since fall 2022, leading some investors to sell shares to lock in profits. Despite the recent decline, Nvidia remains up 190% on a 12-month basis, indicating strong performance over the year. The company is part of a group of top-performing stocks dubbed the “Magnificent 7,” which includes industry giants like Apple, Microsoft, and Tesla.
However, critics argue that Nvidia appears overvalued, trading at a price 73 times higher than its earnings over the last 12 months. This valuation is significantly higher than the broader S&P 500 index, where companies trade at 26 times their earnings. Some skeptics believe that the overall U.S. stock market is overpriced compared to historical trends.
Despite concerns about a potential stock market bubble, Nvidia continues to drive growth and innovation in the AI sector. The company’s chips are in high demand for various AI applications, contributing to its significant market value. Analysts predict robust revenue growth for Nvidia in the coming years, with estimates suggesting a doubling of revenue by fiscal year 2025.
In conclusion, while Nvidia has faced recent volatility, its long-term growth prospects remain strong as it continues to shape the future of technology and the economy. Investors are closely monitoring the company’s performance amid broader market trends and potential risks of overheating in the stock market.
Article Source
https://apnews.com/article/nvidia-chip-ai-apple-microsoft-51cc2b56e5871111907de6ad9cab59ae