Nvidia, the renowned chipmaker, has experienced a significant decline in its stock price over the past three consecutive trading days, resulting in a 13% drop from its recent peak. This decline follows Nvidia’s brief period as the world’s most valuable company. On Monday, the stock experienced its second-steepest drop of the year, falling 6.7% to $118.11.
The repercussions of Nvidia’s decline have extended to other tech companies and chipmakers associated with the artificial intelligence (AI) boom. Super Micro Computer, a company that sells servers equipped with Nvidia’s AI chips, saw an 8.7% slide, while Dell, a competitor in the same market, fell 5.2%. Additionally, chip designer Arm experienced a 5.8% drop, and semiconductor giants Qualcomm and Broadcom faced declines of 5.5% and 3.7%, respectively. These companies had previously been among the biggest gainers due to investor optimism surrounding the AI sector.
Despite the recent slump, Nvidia’s value has nearly tripled over the past year. Last week, it surpassed Apple and Microsoft to become the most valuable U.S. company, with a market capitalization exceeding $3 trillion, before relinquishing some of those gains. On Monday, Nvidia ranked as the fourth-largest loser in the S&P 500.
Super Micro Computer, however, has still achieved a remarkable increase of almost 200% in 2024. Some investors may be seizing the opportunity to secure their gains after a period of rapid growth. Stephanie Link from Hightower expressed her view that Nvidia shares are “overloved” and suggested that other areas within the technology sector offer more attractive risk/reward opportunities.
Nvidia remains confident in the continued demand for its AI graphics processing units (GPUs), as major companies such as Microsoft, Google, Amazon, Oracle, and Meta continue to invest billions of dollars in these chips to power their data centers and cloud services. Furthermore, Nvidia is set to release its next-generation AI chips, named Blackwell, later this year. Analysts anticipate that this launch could initiate another growth cycle for Nvidia and its partners.
Constellation Research founder Ray Wang expressed his belief that Nvidia’s positive performance will persist for the next 18-24 months, stating that it is a favorable time to buy the dip.