Financial Investment News reporter Chen Yuhe
Nvidia, the AI chip giant that staged a "one-day trip" on the throne of the world's largest market capitalization, is continuing to attract the attention of the global capital market. After closing Monday's biggest one-day drop in two months, Nvidia has not only fallen back to third place in market capitalization, but there are also growing concerns about whether the stock price has peaked.
"Driven by the AI boom, Nvidia's stock price has risen too fast and too violently." Shen Meng, director of Xiangsong Capital, said in an interview with a reporter from Financial Investment News that it is normal for the stock price to enter a correction after the stock price exceeds a reasonable boundary.
Nvidia's market capitalization fell below $3 trillion
On Monday, local time in the United States, Nvidia closed down 6.68% at $118.11, with a closing market capitalization of $2.91 trillion, falling below the $3 trillion mark.
It is worth noting that just last Tuesday (June 18), Nvidia just became the new global "market capitalization brother" with a market value of 3.34 trillion US dollars.
On June 19, the U.S. stock market was closed for one day, and Nvidia's stock price fell continuously for the next three trading days, with a cumulative decline of 12.89% during the period. At the same time, the company's market value has also been overtaken by Microsoft and Apple, and it quickly bid farewell to the world's largest market capitalization.
Previously, because Nvidia's potential revenue scale was too strong, many institutions' forecasts were difficult to keep up with its growth pace. According to the data, Nvidia's revenue in the latest fiscal quarter hit a record high, with a year-on-year growth rate of 262% exceeding the expectations of most Wall Street analysts.
After Nvidia's stock price hit a high, some institutions even gave a price target of $200. Masayoshi Son, the founder of SoftBank Group, also said at the shareholders' meeting that he regretted selling Nvidia. If Son hadn't liquidated his Nvidia stock in 2019 (with a return on investment of about $3.3 billion), he would have had the opportunity to make an additional $150 billion.
Before this stock price correction, Nvidia's stock had risen by more than 170% in half a year.
Concerns about the stock price peaking are starting to grow
"The recent sharp fluctuations in Nvidia's stock price reflect the market's concerns about the prospects of the AI industry to a certain extent." Xing Huanlai, a professor at the School of Computer and Artificial Intelligence at Southwest Jiaotong University, told the Financial Investment News that the sharp fluctuations in stock prices not only affect investor confidence, but also may have an impact on the long-term strategy of enterprises. Competition within the AI industry is fierce, with major players vying for technological superiority and market share.
According to reports, Nvidia has recently become the stock with the largest short selling volume in the U.S. stock market. Some traders said there was no underlying reason behind the sell-off in the last two days, but it did highlight the fact that the stock price had climbed at an alarming rate, leaving it vulnerable to sudden drawdowns.
Wall Street analysts are showing growing concern. On the one hand, six to seven percent of NVIDIA's revenue comes from the top 10 customers, which is highly concentrated. As a result, customer changes can pose risks. On the other hand, Nvidia is currently maintaining its leading position, but its competitors are also catching up.
The direct trigger for the decline in Nvidia's stock price may be related to the company's CEO Jensen Huang and other senior executives intensively reducing their holdings and cashing out.
According to the data, in the seven trading days from June 13 to June 24, Huang has reduced his holdings of Nvidia shares by a total of 720,000 shares, cashing out about $95 million. Nvidia's executive vice president of operations and other senior executives have also reduced their holdings by tens of millions of dollars. During this period, although there is a view that the shares sold by Huang are "a drop in the bucket" compared to the total number of shares held by Huang, Nvidia's market value has evaporated more than $550 billion in the correction in the past three trading days. Therefore, Huang's nearly $100 million reduction was also evaluated by market participants as "the most expensive reduction in history".
Pay close attention to changes in the AI industry chain
The rapid decline in the share price of industry leader Nvidia has also affected listed companies in AI, computing power and other related industrial chains.
Wind data shows that as of the close of trading on June 25, the AI application sector, AI computing power sector, and NVIDIA industrial chain sector fell by 1.51%, 2.24%, and 2.54% respectively. In the past five trading days, Thunderda, ST Contact, Hongbo Shares, Shannon Xinchuang, Helin Micro-Nano, VeriSilicon, etc. have fallen by 21.30%, 20.41%, 18.22%, 17.09%, 15.2%, and 15% respectively.
"At present, although the AI market is hot, the supply has far exceeded the demand." Shen Meng said that if the prosperity of the AI industry fluctuates significantly, the computing power industry, as a "shovel seller", will also be affected to a certain extent.
However, there are still institutions that continue to be optimistic about the prosperity of the AI and computing power industry. Huatai Securities believes that in the context of the surging AI large model and the geometric growth of the demand for computing power, AI-related semiconductors, data centers, communication facilities, and electricity markets will achieve rapid growth.
"The importance of computing power in the AI industry will continue to emerge, but its specific manifestations and impact will evolve with the advancement of technology and changes in market demand. The relevant industry chain needs to pay close attention to these changes, so as to promote the implementation of technological innovation and application, so as to occupy a dominant position in the future scientific and technological competition. Xing Huanlai said.
In Xing Huan's view, the AI and computing power industry is currently in a stage of rapid development, full of new opportunities, but also facing many challenges. A large amount of investment and capital injection has also provided strong support for the development of the industry. While the outlook is bright, market uncertainty and the pressure from competitors also need to be faced by the entire industry.
Nvidia is not the only giant that has attracted attention in the AI field, but Apple, Qualcomm, Microsoft, etc. are also expected to lead the development of the AI terminal industry. In addition, Huawei's HiSilicon Ascend AI chips are building a "second pole" of computing power. Huaxi Securities believes that the single-card computing power of the Ascend 910 chip is comparable to that of the NVIDIA A100. With the support of AI, Huawei's HarmonyOS ecosystem, large model base, and cloud applications will accelerate the upgrade of industrial intelligence.
Xing Huanlai said that Huawei's Ascend series AI chips and Cambrian's deep learning processors have strong competitiveness in the global market, and these independent innovations have laid a solid foundation for the development of domestic AI technology.
In addition, the domestic AI and computing power industry has shown strong advantages and highlights in terms of large-scale enterprise leadership, talent training, industrial ecological improvement, and international cooperation. Xing Huanlai believes that these factors have jointly promoted the rapid development of the domestic AI and computing power industry, making it have important influence and competitiveness in the world.