The market value has evaporated by $430 billion! Nvidia lost two Qualcomm in three days, and Wall Street began to worry

The Paper

2024-06-25 10:20Published on the official account of Shanghai The Paper

After briefly becoming the world's largest company by market capitalization last Tuesday, the stock price of AI (artificial intelligence) chip leader Nvidia has fallen for three consecutive days, or entered a correction phase.

On June 24, local time, Nvidia (Nasdaq: NVDA) shares closed at $118.11 per share, down 6.68%, with a total market capitalization of $2.91 trillion. Just this month, Nvidia became the third company in history to break the $3 trillion mark, and last week it hit its highest closing price in history after a stock split of $135.58 per share, bringing its market capitalization to $3.34 trillion, surpassing Apple and Microsoft to become the world's largest company by market capitalization.

However, after that, Nvidia's stock price corrected. In the last three trading days, Nvidia fell more than 12% from the closing price of $135.58 per share on the 18th, and its market value has evaporated by about $430 billion (about 3.12 trillion yuan), setting a record for the largest three-day decline in the market value of a single listed company, equivalent to the market value of two Qualcomm ($224.1 billion).

Investors are opting for profit-taking, and at the same time, Nvidia CEO Jensen Huang is selling stocks. According to SEC filings, Huang reduced his holdings of 720,000 Nvidia shares between June 13 and 21, bringing the total cash amount to $94.6 million. In addition, Nvidia's chief financial officer, Colette Kress, and other executives are also reducing their holdings.

Nvidia's decline also triggered a slide in the share prices of chipmakers and other AI-related companies. For example, shares of Chaowei Computer (Nasdaq:SMCI), which sells servers equipped with Nvidia's AI chips, fell 8.7%, Dell (Nasdaq:DELL) fell 5.2%, and semiconductor giants Qualcomm (Nasdaq:QCOM) and Broadcom (Nasdaq:AVGO) fell 5.5% and 3.7%, respectively.

Although the stock price has fallen sharply in recent days, Nvidia has still risen amazingly this year, ranking second among the constituents of the S&P 500 index, second only to Chaowei Computer. Wind data shows that Nvidia's stock price has risen 138.53% so far this year.

As for the long-term development of Nvidia's stock price, Wall Street has mixed opinions, and the overall sentiment is still optimistic.

In a note last week, analysts at Bank of America reiterated their $150 price target for the stock, calling it a "top pick": "The stock is vulnerable to cashing out due to the sharp climb in the stock, but we think any volatility should be short-lived." ”

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

Of course, there are some cautious voices. For example, Neville Javeri, a portfolio manager at Allspring Global Investments, said: "In the short term, investors may start to get tired of AI or be more concerned about index concentration." ”

Patrick Moorhead, founder and CEO of market research firm Moor Insights & Strategy, noted that investors should watch for signs of a correction to continue. He believes that while Nvidia's dominance won't change "in the next six to nine months," investors should be watching "whether the companies in the ecosystem are making a profit."

"Software companies such as Adobe, Salesforce, SAP and ServiceNow, for example, if businesses and consumers don't pay more for their new AI capabilities, the entire monetization chain will be disrupted, as we saw in the dot-com bubble," Moorhead explains. ”

Currently, 54 out of 60 analysts have given Nvidia a "buy" or "outperform" rating, while the remaining six have a "hold" rating, according to Factset. Analysts have an average price target of $126.57 and a maximum price target of $200.

In addition, Nvidia will hold its annual shareholders' meeting on June 26 local time. At this point in the high-level sell-off of their own stocks, the market may pay close attention to their statements.

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