Nvidia Corporation, a leading artificial intelligence company, experienced a significant rebound on Tuesday, gaining over 6% in stock value. This comes after a staggering loss of $550 billion in market value since Thursday, June 20. Last week, Nvidia briefly held the title of the most valuable company globally, with a market capitalization of $3.46 trillion. However, the company has since settled in as the third most valuable corporation, with a market value of $3.10 trillion as of Tuesday.
The decline in Nvidia’s stock price, which saw a 16% drop since Thursday, has raised concerns among analysts about its impact on the broader market. Some experts warn that a substantial sell-off of Nvidia shares could potentially trigger a wider market slump, as reported by the Financial Times.
Barry Bannister, chief equity strategist at Stifel, expressed his apprehension, stating, “If Nvidia corrects pretty hard in the coming months, it becomes very difficult for the [S&P 500] to keep rising. And Nvidia will decelerate.”
On Monday, Nvidia’s shares fell by 4% following the disclosure that its CEO and co-founder, Jensen Huang, had sold nearly $95 million worth of stock during the period when the company reached its peak valuation. These trades were part of a pre-scheduled Rule 10b5-1 sale plan established in March, according to filings cited by the Financial Times.
The decline in Nvidia’s stock has also had a negative impact on the broader chipmaking sector, with the PHLX Semiconductor Index down 2.5% and the Invesco QQQ Trust, which tracks the tech-dominated Nasdaq Composite, down 0.4% since Thursday.
However, on Tuesday, there was a rebound in the technology sector, with the iShares U.S. Technology ETF gaining 1.7%, Fidelity MSCI Information Technology Index ETF jumping 1.4%, and First Trust Dow Jones Internet Index Fund rising by 1.4%.