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NVIDIA The artificial intelligence chip darling officially entered correction territory on Monday as its shares plunged even as the rest of the Nasdaq Composite rose to record levels.
Chipmakers and the de facto artificial intelligence industry have gained 166% this year on continued excitement about hot technology trends. However, the stock price has faced a downturn recently.
The stock fell 4.5% in December, officially entering correction territory, and is down about 11% from its closing high of $148.88 last month. The definition of a market correction may vary. It’s widely considered by many to be down 10% or more from its all-time high closing price.
The stock closed down 1.7%.
“You need Nvidia and you need their infrastructure chips,” said Keith Lerner, co-chief investment officer at Truist. “But I think the market is also showing that there are other beneficiaries beyond that. There’s a rotation within the Big Seven, and we’ve had this year I’ve seen it a few times.”
Nvidia stock price on Monday
Nvidia’s recent poor performance could signal some profit-taking on Wall Street after another stellar year. Since the launch of ChatGPT in late 2022, data center demand has continued to grow, benefiting manufacturers of graphics processing units that support large language models.
But for market leaders and fundamental players among the three major moving averages, there are some reasons for concern. The market continues to hit new highs due to Nvidia’s poor performance. If this pattern continues, it could be a warning sign, with Roth MKM noting that the $125 to $130 levels mark a key test for the stock and the market as a whole.
Despite Nvidia’s woes, other chipmaking stocks performed well, including Broadcom It hit a new high on Monday. The stock soared about 11% intraday on Monday, following Friday’s 24% rise, which pushed the stock’s market value past $1 trillion following a strong earnings report.
Without Nvidia’s help, the Nasdaq hit a trading record on Monday.
“Broadcom’s comments last week may have prompted momentum investors to start looking for faster growth,” said Kim Forrest, chief investment officer at Bokeh Capital Partners. “Momentum has been driving this stock. I don’t think momentum has completely killed it yet, but The function of momentum is the function of momentum, which is that it seeks higher flight.”
Other semiconductor stocks also rose Monday, including Micron Technology This week’s quarterly results were up about 6%. Mayville Technology and Pan-forest research Increased 3% and 2% respectively ON Semiconductor and British Semiconductor Each increases by about 1%.
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