Nvidia stock falls more than 6% as investors abandon chip heavyweight

Nvidia (NVDA) stock fell more than 6% to close at $118.11 per share on Monday, as investors pulled out of the hottest AI game of the year. The session marked the third straight day of losses for shares of the chip heavyweight.

The stock fell more than 12% from its all-time closing high of $135.58 last Tuesday, when Nvidia’s market cap temporarily dethroned Microsoft (MSFT) as the most valuable company.

The chipmaker has since returned the crown with a market capitalization of around $2.9 trillion, below the valuations of Microsoft and Apple (AAPL) of more than $3 trillion 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-for-1 stock 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 think any volatility (is) likely to be short-lived,” Bank of America analysts said in a note last week, reiterating a note purchase and a price target of $150 while calling Nvidia. a “first choice”.

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)

Correction: A previous version of this article incorrectly stated that Microsoft and Apple’s valuations were in the billions. Both companies have a market capitalization of over $3 trillion. We regret the error.

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

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