It appears that the persistent drop in NVIDIA’s (NVDA) stock price may signal that the Artificial Intelligence (AI) market is entering a downturn, with some speculating that the “AI bubble” might be popping.
NVIDIA Business Model Disrupted
Business executive Bryan Beal expressed his perspective on X, emphasizing that the AI boom is not coming to an end.
An entrepreneur pointed out for some time, many individuals were unaware that NVIDIA wasn’t manufacturing chips themselves. Instead, the business specializes in designing semiconductors, while TSMC Limited manufactures them.
Since the beginning, companies like Meta, Amazon, OpenAI, Microsoft, Google, and others have been important clients for NVIDIA, helping it get established. However, in more recent times, some of these customers have decided to develop their own AI chips, resulting in a substantial loss of business for NVIDIA. Just a few days ago, Intel and Google introduced the Gaudi 3 and Axion chips as competitors to NVIDIA’s latest AI chip, Blackwell.
The AI bubble is not bursting.
An increasing number of investors are coming to understand that Nvidia’s primary role is not in manufacturing chips but rather in designing them. Taiwan Semiconductor Manufacturing Company (TSMC) is responsible for the actual production. Notably, major clients such as Meta, Amazon, OpenAI, Microsoft, Google, and others have declared their intentions to develop their own AI chips for internal use.
— Bryan Beal (@bryanrbeal) April 19, 2024
The unexpected exit of several firms might have led to the recent significant drop in NVDA’s stock price. Although this development could signal trouble for NVIDIA, it may also represent the beginning of the AI market as a whole, suggesting that the “AI bubble” is not yet deflated.
The NVIDIA Bears Sets In
NVIDIA, similar to numerous other tech businesses, has seen a significant decline in its stock value over the past few days, resulting in a considerable drop in price.
Since February, this is the point where the stock has reached its lowest level. Furthermore, it experienced its most significant one-day decline since March 2020 on Friday. The market capitalization of the stock dropped under $2 trillion, and its shares plunged by 7.3%, causing them to slide below $800.
In just over 8 months after reaching a market capitalization of $1 trillion in late 2023, NVIDIA’s market value soared to an impressive $2.4 trillion in February 2024. The stock prices have consistently climbed since then, reaching over $950 per share. This remarkable growth significantly increased NVIDIA’s market worth.
Despite the robust economic information and unexpectedly high inflation figures released this month, markets and policymakers have had to revise their predictions for the number of interest rate reductions in 2023.
NVIDIA’s perspective has recently led to uncertainty in tech stocks, including its own. As of now, NVIDIA’s stock on Nasdaq is priced at $762, representing a 10% decrease in the last day and over 14% decline over the past five days.
Despite the drop in value starting on Friday, the AI-chip company managed to keep its rank as the third most valuable US company, surpassing Google’s (GOOGL) and Amazon’s (AMZN) values.
Read More
- BCH PREDICTION. BCH cryptocurrency
- BTC PREDICTION. BTC cryptocurrency
- LUNC PREDICTION. LUNC cryptocurrency
- MNT PREDICTION. MNT cryptocurrency
- USD PHP PREDICTION
- SOL PREDICTION. SOL cryptocurrency
- USD MYR PREDICTION
- ZKJ PREDICTION. ZKJ cryptocurrency
- PSTAKE PREDICTION. PSTAKE cryptocurrency
- USD COP PREDICTION
2024-04-20 18:36