Santa Clara, California – Nvidia’s stock took a sharp dive on Monday, plummeting over 6% to close at $118.11 per share as investors shifted away from what was considered the hottest artificial intelligence (AI) investment of the year. It marked the third consecutive day of losses for the chip heavyweight. Since hitting an all-time high of $135.58 last Tuesday, the stock has fallen more than 12%.
The recent decline in Nvidia’s stock value has seen the company’s market capitalization drop to around $2.9 trillion, falling behind the valuations of both Microsoft and Apple, which each exceed $3 trillion. Nvidia had played a significant role in boosting the S&P 500 and Nasdaq to multiple record highs until last Thursday.
Following a 10-for-1 stock split on June 10, Nvidia has been closely watched by investors and analysts as its performance in the market remains uncertain. Wall Street remains divided on the long-term outlook for Nvidia, with some analysts expressing concerns about the stock’s vulnerability to profit-taking, while others maintain a positive stance, referring to Nvidia as a top pick with potential for growth.
According to Bank of America analysts, any volatility in Nvidia’s stock price is likely to be short-lived, emphasizing a Buy rating and setting a price target of $150. Similarly, Jefferies analysts have maintained a Buy rating and raised their price target to $150, highlighting Nvidia as the “king and kingmaker” in the industry.
As investors assess the future of Nvidia’s dominance in the market, founder and CEO of Moor Insights & Strategy, Patrick Moorhead, advised caution in monitoring downstream profitability. He highlighted the importance of software companies like Adobe, Salesforce, SAP, and ServiceNow in sustaining the demand for new AI features. Moorhead warned that if these companies and consumers do not value these innovations, Nvidia’s positive trajectory could come to an abrupt halt.
With uncertainties looming over Nvidia’s future, investors are advised to remain vigilant for any signs of a potential market pullback. Despite projections of continued dominance in the coming months, the company’s long-term success hinges on the reception and adoption of AI technologies by businesses and consumers, setting the stage for potential shifts in the market landscape.