Nvidia stock falls 5% and extends its slide into correction territory

Nvidia (NVDA) stock fell as much as 5% on Monday as investors pulled out of the year’s hottest AI game. The session marked the third straight day of losses for shares of the chip heavyweight as they slipped into correction territory.

The stock fell more than 11% from its all-time high of $135.58 last Tuesday, when Nvidia’s market cap temporarily dethroned Microsoft (MSFT) as the most valuable company. Anything more than a 10% decline from a recent high is considered correction territory.

The chipmaker has since returned the crown with its market capitalization of around $2.9 trillion, below Microsoft and Apple’s (AAPL) valuation of more than $3 billion each.

Until Thursday of last week, Nvidia played a pivotal role in taking the S&P 500 (^GSPC) and Nasdaq (^IXIC) to repeated record highs in 2024.

The Santa Clara, Calif.-based company completed a 10-to-1 split on June 10.

As Yahoo Finance’s Allie Canal recently reported, Wall Street isn’t sure if the recent selloff signals long-term concerns about the stock.

“The stock’s sharp rise leaves it vulnerable to profit-taking, but we argue that any volatility [is] likely short-lived,” Bank of America analysts said in a note last week, reiterating a buy rating and a $150 price target while calling Nvidia a “top pick.”

Over the weekend, analysts at Jefferies maintained a buy rating on the stock and raised their price target from $135 to $150, calling Nvidia a “king and kingmaker.”

Meanwhile, Patrick Moorhead, founder and CEO of Moor Insights & Strategy, told Yahoo Finance on Friday that investors should pay attention to signs that a pullback is here to stay.

While he doesn’t see the status quo of Nvidia’s dominance changing over the next six to nine months, investors should focus on “the downstream profitability that people in the ecosystem realize or don’t realize.”

“It’s about software companies like Adobe, Salesforce, SAP, and ServiceNow. Because if these businesses and consumers don’t pay more for these new AI features, then this whole gravy train will come to a screeching halt, as we saw in the Internet outage,” he explained.

Nvidia CEO Jensen Huang speaks at Computex 2024 in Taipei, Taiwan, in June. (AP Photo/Chiang Ying-ying, file) (ASSOCIATED PRESS)

Ines Ferre is a senior economics reporter for Yahoo Finance. Follow her on @ines_ferre.

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