NVIDIA’s stock price quickly retreated after hitting a new high last week, with a drop of 13% in three trading days, evaporating about $430 billion in market value and dragging down the entire semiconductor sector. How do analysts view the future?
In the midst of the AI boom, NVIDIA, the AI chip giant led by Huang Renxun, hit a new high of $140.76 on the 20th of last week, briefly surpassing Microsoft to become the largest company in terms of market value in the US stock market.
However, after reaching the new high, NVIDIA’s stock price quickly retreated. It closed down 3.54% that day and fell by 6.68% yesterday (24th), closing at $118.11. It has fallen by 13% in the past three trading days, with a total market value evaporation of about $430 billion. Its current market value has dropped to $2.91 trillion, marking the largest market value drop for a single company in three days in history.
Due to NVIDIA’s drag, the Philadelphia Semiconductor Index fell by 3%, with 29 of the 30 constituent stocks falling. TSMC ADR fell by 3.5%, while Broadcom, Marvell, and Qualcomm fell by 4% to 5.7%. The performance of other major US stock indices was as follows:
The S&P 500 Index fell by 15.75 points, or 0.3%, to close at 5,447.87 points;
The Nasdaq Composite Index fell by 192.54 points, or 1.1%, to close at 17,496.82 points;
The Dow Jones Industrial Average rose by 260.88 points, or 0.7%, to close at 39,411.21 points (rising for the fifth consecutive day).
In contrast to other indices, the Dow Jones Industrial Average’s rise indicates investors’ enthusiasm for AI, which now seems to be focusing on other stocks. Stocks other than tech stocks also generally rose, with 9 of the 11 sectors in the S&P 500 Index closing higher.
Facing NVIDIA’s retreat, analysts pointed out that NVIDIA’s recent trading has shown a bearish pattern. Katie Nixon, Chief Investment Officer at Northern Trust Wealth Management, stated that NVIDIA accounted for one-third of the S&P 500 Index’s rise in June and 44% of the rise since the beginning of 2022 before the retreat on the 20th. This means that the performance of the entire S&P 500 is almost entirely attributable to NVIDIA. Neville Javeri, portfolio manager at Allspring Global Investments, commented on this.
However, Ari Wald, head of Oppenheimer’s technical analysis department, believes that the long-term trend is more important for NVIDIA than any specific level. NVIDIA is still trading above the 50-day moving average of about $101 and also maintains above the 100-day moving average level of $92, indicating that the stock price remains strong.
Additionally, analysts do not believe that this will have a comprehensive drag on the market performance. Carl Ludwigson, Managing Director of Bel Air Investment Advisors, stated that. Jack Janasiewicz, Chief Portfolio Strategist at Natixis Investment Managers, also said, “The market is selling off some previously rising stocks and buying some underperforming stocks. This is a wait-and-see before the inflation data is released on Friday, with expectations that the data will be quite weak.”