Topline
Longtime Wall Street favorite Nvidia extended a rare down stretch, as shares of the artificial intelligence colossus slipped into correction territory, a ding that comes as Nvidia’s trillion-dollar peers enjoy a robust period of gains.
A Nvidia display in Shanghai.
Key Facts
Nvidia stock fell 1.7% Monday to $132, its lowest end-of-day share price since Oct. 15.
That’s 11% below the stock’s all-time closing high of $149 set Nov. 7, officially heading into a correction.
Monday’s losses moved against a broader rally for technology stocks, with the Nasdaq index gaining 1.2% to a new record.
And shares of each of the six other most valuable American companies – the other members of the “Magnificent Seven” group including Apple, Amazon, Facebook parent Meta, Google parent Alphabet, Microsoft, Nvidia and Tesla – gained at least 0.7% apiece, led by Tesla’s 6% rise.
Big Number
5.7%. That’s how much shares of Nvidia are down since Election Day, far underperforming the S&P 500 index’s 5% gain during the period. Notably, the six-week stretch has been a strong one for Nvidia’s big tech peers, as each of the other Magnificent Seven stocks advanced at least 9.9%. There has been no singular catalyst for the Nvidia selloff – its earnings report last month exceeded analyst estimates across the board – though the stock has previously slumped due to geopolitical fears from Nvidia’s reliance on Taiwanese manufacturers.
Contra
The recent dip for Nvidia shares may be hard to digest for investors, especially in an otherwise rosy market, but the stock’s longer-term returns are still eye popping. Nvidia’s 170% year-to-date return is the best of any company valued at more than $200 billion, according to FactSet data, with shares up a whopping 700% over the last two years.
Key Background
Nvidia rose to prominence over the last two years as the unquestioned market leader in designing the semiconductor technology powering generative AI, causing its market capitalization to grow from below $300 billion in late 2022 to as high as $3.6 trillion last month. Nvidia, whose clientele includes Amazon and Microsoft, translated the surging interest in generative AI into a significant upswing in its financial performance, as sales grew by more than 600% during Nvidia’s most recent quarter compared to 2022’s comparable period. Nvidia is still the third-largest company in the world by market value, trailing only Apple and Microsoft.