The big chipmaker Nvidia saw a spectacular decline for three straight trading days — losing 13% from its peak. This fall happened just after Nvidia had a brief stint as the most valuable company in the world. Monday marked the second largest drop this year for the company; share prices went down by 6.7% to $118.11. That dip further led to a downward spiral among other companies dealing with chip manufacturing along with technology firms that are closely associated with artificial intelligence wave.
The shares of Super Micro Computer, a server firm that uses Nvidia’s AI chips, dropped by 8.7% — whereas Dell, another player in this field, had a smaller 5.2% descent. Arm, Qualcomm, and Broadcom— other semiconductor behemoths— weren’t spared either: they recorded significant drops of 5.8%, 5.5%, and 3.7% respectively. Despite their historical upward trajectory, these companies did not evade losses today; many have prospered over recent years because investors have staked them as key vicinities for AI expenditure.
Despite the recent slump, Nvidia’s value has nearly tripled over the past year. Last week, Nvidia briefly surpassed Apple and Microsoft to become the most valuable U.S. company, with a market capitalization exceeding $3 trillion. However, it soon relinquished some of those gains, and on Monday, Nvidia was the fourth-biggest loser in the S&P 500. Nonetheless, Super Micro remains up almost 200% in 2024.
Investors might be seizing the opportunity to lock in gains after a few hot months. Stephanie Link from Hightower commented on CNBC that while the party isn’t over for Nvidia, the stock had an exceptional run and other technology sectors may offer more attractive risk/reward scenarios. She referred to Nvidia shares as “overloved.”
Despite the recent dip, Nvidia maintains that demand for its AI graphics processing units (GPUs) remains robust, with companies like Microsoft, Google, Amazon, Oracle, and Meta investing billions in these chips to power their data centers and cloud services. Nvidia is set to ship its next-generation AI chips, called Blackwell, later this year, which some analysts predict could initiate another significant growth cycle for the company and its partners.
Ray Wang, founder of Constellation Research, stated on CNBC’s Squawk Box that Nvidia’s performance is likely to continue strong over the next 18-24 months, suggesting that the current dip might be a good buying opportunity.
