AI News: NVIDIA Stock Falls To 2-Month Low As Hype Blows Over

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As a seasoned analyst with over two decades of experience under my belt, I’ve witnessed market fluctuations that could make even the most hardened investors sweat. The recent downturn in Nvidia (NVDA) shares, despite its impressive year-to-date and post-2022 gains, is no exception.

Following a stretch as the top-valued company, Nvidia (NVDA), known for AI and chip production, has experienced a decrease in its stock value to a two-month low. Over a span of five weeks, it has erased approximately $1 trillion from its market capitalization, with each week witnessing a loss of around $200 billion.

The Nvidia Performance To Date

As a result, the leading AI company has experienced a decline of approximately 27% from its peak All-Time High (ATH). To put this in perspective, this loss is about 1.5 times greater than Tesla’s entire market value and equals Berkshire Hathaway’s total market cap. It’s important to note that the current struggles for NVDA didn’t stem from a single incident. Instead, they were caused by a cumulation of minor trends, one of which is the downward trend affecting semiconductor stocks as a whole.

NEWS FLASH: Nvidia’s market capitalization, represented by the symbol $NVDA, has wiped out a staggering $1 trillion in value since it reached its peak on June 20th.

In other words, $NVDA has erased $200 billion of market cap PER WEEK over the last 5 weeks.

The stock is now down ~27% from its recent all time high.

In just 5 weeks,…

— The Kobeissi Letter (@KobeissiLetter) July 30, 2024

The performance of NVDA also mirrors that of Bitcoin (BTC) with more than 11% loss from its ATH.

The aggressive remarks made by President Donald Trump regarding trade and military policies in East Asia contributed to this particular event. This area holds significant importance for American semiconductor manufacturers, particularly due to its role in production and distribution.

Stocks often dip following a prolonged spell of growth due to investors and portfolio managers realizing their gains and rebalancing their portfolios. However, it’s worth noting that Nvidia (NVDA) has seen an impressive 110% increase year-to-date and a staggering 610% jump from the end of 2022, bucking this trend.

At this level, the stock is delivering truly eye-popping returns for a company of its size.

Can AI, Macroeconomics, and Politics Changes Shift The Trend?

It’s quite possible that a semiconductor firm is facing the brunt of the impact as large tech companies expand into struggling smaller businesses, given that investors are anticipating the initial reduction in interest rates since 2020.

Significant excitement is building around the possibility of an upcoming interest rate reduction, with former Vice Chair of the Federal Reserve, Roger W. Ferguson, forecasting a U.S. Fed rate cut in September. This prediction is based on recent signs of slowing inflation and consumer prices.

In a contrasting development, the AI environment has recently witnessed the debut of novel tools such as OpenAI’s SearchGPT.

Last week, I learned about a new search engine launched by a well-known AI company, which could potentially challenge Google’s dominance in the market. For now, this innovative tool is only available in its beta testing phase and OpenAI has decided to collaborate with a select group of users and publishers for their valuable feedback. The ultimate goal is to fine-tune the tool before integrating it with ChatGPT to make it even more robust and user-friendly.

Overall, the sentiments surrounding Nvidia are influenced by the ongoing election season. As the competition between candidates like Kamala Harris and Donald Trump continues, it’s the AI market that will ultimately determine which candidate is beneficial for the industry in the long run.

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2024-07-30 23:51