Nvidia (NVDA) stock took a hit on Monday, dropping over 6% to close at $118.11 per share as investors shifted away from one of the hottest AI investments of the year. This marked the third consecutive day of losses for the chip giant.
The stock has fallen more than 12% from its recent all-time high of $135.58, where Nvidia briefly held the title of the most valuable company, surpassing Microsoft (MSFT). However, the company has since relinquished that title with a market capitalization of around $2.9 trillion, trailing behind both Microsoft and Apple (AAPL) with valuations exceeding $3 trillion each.
Leading up to the recent decline, Nvidia played a significant role in propelling the S&P 500 (^GSPC) and the Nasdaq (^IXIC) to multiple record highs in 2024.
Following a 10-for-1 stock split on June 10, Nvidia has been the subject of mixed opinions on Wall Street regarding the future of the stock. While Bank of America analysts have reiterated a Buy rating and $150 price target, citing any volatility as short-lived, Jefferies analysts have raised their price target to $150 from $135, calling Nvidia the “king and kingmaker.”
However, experts like Patrick Moorhead, founder and CEO of Moor Insights & Strategy, caution investors to be mindful of potential signs of a sustained pullback. While Moorhead believes Nvidia’s dominance will likely continue in the next six to nine months, he highlights the importance of monitoring the downstream profitability of ecosystem partners like Adobe, Salesforce, SAP, and ServiceNow. If these companies and consumers do not show willingness to pay more for new AI features, the momentum could come to a halt, similar to the internet bust.
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