Nvidia Stock Falls 5% as Tech Giant Enters Correction Territory
Nvidia (NVDA) stock saw a sharp decline of up to 5% on Monday as investors shifted away from what has been one of the hottest AI investments of the year. This marked the third consecutive day of losses for the chip heavyweight, pushing its shares into correction territory.
The stock has fallen more than 11% since reaching its all-time closing high of $135.58 last Tuesday when Nvidia briefly surpassed Microsoft (MSFT) to become the most valuable company. Any drop exceeding 10% from a recent peak is typically classified as correction territory.
However, Nvidia has now relinquished its top ranking in terms of market capitalization, with its valuation currently around $2.9 trillion, placing it below both Microsoft and Apple (AAPL), each valued at more than $3 billion.
Up until last Thursday, Nvidia played a vital role in driving the S&P 500 (^GSPC) and the Nasdaq (^IXIC) to numerous record highs in 2024. Following its 10-for-1 split on June 10, the company has experienced a wave of volatility in the market.
The recent price movement has left Wall Street analysts with mixed opinions on the future of Nvidia. While Bank of America analysts maintain a Buy rating and $150 price target, predicting any potential volatility to be short-lived, Jefferies analysts have also increased their price target to $150, emphasizing Nvidia’s strength in the market.
However, amid the uncertainty, experts like Patrick Moorhead, founder and CEO of Moor Insights & Strategy, advise investors to remain cautious. Moorhead suggests keeping an eye on the downstream profitability within Nvidia’s ecosystem to gauge the stock’s long-term prospects.
He highlights the importance of monitoring software companies like Adobe, Salesforce, SAP, and ServiceNow, as their adoption of new AI features could influence Nvidia’s continued success. By examining the willingness of enterprises and consumers to pay for advanced AI technologies, investors can gain insight into the sustainability of Nvidia’s growth trajectory.
As the market continues to evolve, it is essential for investors to stay informed on the latest developments within the tech sector. Stay connected with Extreme Investor Network for expert insights and analysis on the financial landscape to make informed investment decisions.