Party over for Nvidia? Not really, according to analysts. What is certain is that, after having overtaken Apple and Microsoft in the ranking of the US companies with the highest market capitalization, the chip manufacturer’s stock has gone into reverse, falling for three days in a row and is now down 13% compared to its peak. The fall sent $430 billion of capitalization up in smoke. Despite the expected correction, Nvidia’s value remains more than tripled compared to a year ago.
What the analysts say
“I don’t think the party is over, but the stock has had an incredible run and there are so many other places in tech that offer more attractive risk/reward,” Hightower’s Stephanie Link said on CNBC on Friday, calling Nvidia stock “loved too much”.
Nvidia’s performance “will continue for the next 18 to 24 months,” said Ray Wang, founder of Constellation Research, speaking on CNBC’s Squawk Box on Monday. “I think it’s a good time to buy the dip.”
For David Pascucci, Markets Analyst for XTB,
“What we saw above Nvidia represents the excess of this market that led to the capitalization of Nvidiaalready a company with a large capitalisation, to become a market giant in a short time. Multiply your market capitalization by 10 times in just over a year and a half it has a price and the price was a drop of around -16% in 3 trading days. The title however remains within the top 3 of the market giants with a capitalization of approximately 2.9 trillion dollars, it follows that this is what we are seeing it could just be the beginning of a downsizing of the title which vaguely recalls the performance of Tesla, another company that the market rewarded in an “unjustified” way, especially seeing how the prices then adjusted over the long term. At the moment Nvidia it is what the market observes to establish the future trend of the Nasdaq and the S&P500.”
As they remember eToro analyststhe title
“has entered correction territory, falling by almost 13% compared to the historical closing high of June 18th and by 16% compared to the intraday high recorded on June 20th. In just three sessions, the stock lost around $432 billion in market value, more than the entire market capitalization of Dutch ASML. This drop came just as the XLK ETF was being rebalanced, with Nvidia rising from just under 5% to 20.57%, swapping weights with Apple. However, Nvidia, the epicenter of AI development and enthusiasm, remains up 30.7% quarter to date (second only to First Solar among S&P 500 companies) and 138.5% year to date ( also here in second position, surpassed only by Super Micro Computer). These profit takings seem physiological after such a significant rally in less than seven months.”
Who is Nvidia
Founded in 1991, in the first decades of activity Nvidia established itself on the market mainly as a videogame chip company. In the last two years, however, Nvidia shares have skyrocketed because Wall Street has recognized the company’s technology as the engine of an explosion in artificial intelligence, which to date shows no signs of slowing down.
Today, Nvidia holds about 80% of the market for AI chips used in data centers, a business that has grown with the advent of OpenAI. And the repercussions on the accounts are increasingly evident. In the latest quarter, Nvidia’s data center revenue increased 427% from a year earlier, reaching $22.6 billion and accounting for about 86% of the chipmaker’s total revenue.
