NVIDIA’s stock price fell rapidly after reaching a new high last week, with a decline of 13% over the past three trading days, resulting in a market value loss of about $430 billion, dragging down the entire semiconductor sector. How do analysts view the future?
Amid the AI boom, NVIDIA, led by Huang Renxun, reached a new high of $140.76 on the 20th of last week, temporarily surpassing Microsoft to become the largest company by market value in the U.S. stock market.
However, after reaching the new high, NVIDIA quickly retraced, falling by 3.54% on the day to close at $118.11 on the 24th, and then plummeting by 6.68% yesterday. Over the past three trading days, the stock has fallen by 13%, resulting in a total market value loss of about $430 billion. Its current market value has dropped to $2.91 trillion, marking the largest market value decline for a single company over a three-day period.
As a result of NVIDIA’s decline, the Philadelphia Semiconductor Index fell by 3%, with 29 of its 30 constituent stocks falling. TSMC ADR fell by 3.5%, while Broadcom, Marvell, and Qualcomm fell by 4% to 5.7%. Other major U.S. indices performed as follows:
The S&P 500 Index fell by 15.75 points, or 0.3%, to close at 5,447.87.
The Nasdaq Composite Index fell by 192.54 points, or 1.1%, to close at 17,496.82.
The Dow Jones Industrial Average rose by 260.88 points, or 0.7%, to close at 39,411.21 (rising for the fifth consecutive day).
The rise of the Dow Jones Industrial Average, unlike the other indices, indicates investors’ enthusiasm for AI, which currently seems to be shifting to other stocks. Stocks outside the technology sector also generally rose, with nine of the 11 S&P 500 index categories closing higher.
In response to NVIDIA’s retracement, analysts pointed out that the company’s recent trading has shown a bearish pattern. Katie Nixon, Chief Investment Officer of Northern Trust Wealth Management, commented 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. This means that the performance of the entire S&P 500 is almost entirely dependent on NVIDIA. Neville Javeri, portfolio manager at Allspring Global Investments, also 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, and the company is still trading above its 50-day moving average of around $101 and maintaining its 100-day moving average of $92, indicating continued strength in stock prices.
Analysts also do not believe that this will significantly drag down market performance. Carl Ludwigson, Managing Director of Bel Air Investment Advisors, stated this, while Jack Janasiewicz, Chief Strategist at Natixis Investment Managers, said, “The market is selling some previously rising stocks and buying some underperforming stocks. This is a wait-and-see situation before the inflation data is released on Friday, with expectations for relatively weak data.”