Bulls in Nvidia Corp. have come back with a vengeance, pulling the stock of the leading artificial intelligence and semiconductor company out of the abyss and to its best weekly performance in over a year.
Before this week, Nvidia shares NVDA 1.40% had fallen into a bear market because investors were pulling their money out of big tech companies and there were worries that the release of Nvidia’s new Blackwell chip might be pushed back. This made people worry that the AI bubble was popping.
The stock had been going down for four weeks in a row, down 19% as of August 9. This was the longest losing streak for the stock since October 14, 2022, when it went down for five weeks. The shares hit a three-month low on August 7 at $98.91, which was 27% less than their record high of $135.58 on June 18.
Keep in mind that a drop of at least 20% from the high point of a bull market is what many people on Wall Street call a bear market.
Then all of a sudden, things changed.
The stock went up 4.1% at the start of the week after BofA Securities said Nvidia was its top “rebound” pick.
Since then, bulls have been in charge. The stock ended Friday up 1.7%, making it the fifth straight day of gains. In the past five weeks, it has gone up the most (18.9%), the most since May 26, 2023, when it went up 24.6%.
Read also: “Ride the Nvidia wave.” Wall Street says the stock can keep going up even though it is “undeniably pricey.”
The tech analysts at Wedbush Securities have tried to calm people down who are worried that the spending boom on AI is about to end. They say that things are now set up for tech stocks to keep going up.
There are growing concerns about how long it will take for companies to see returns on their investments in AI in the form of higher profits and higher revenue. The Wedbush analysts pointed out that tech earnings were “generally robust,” which made them even more sure that a “AI tidal wave of spending” is still on the way.
They told their clients in a note on Friday, “Rome wasn’t built in a day, and this AI revolution will not either.”
For them, the present situation is like the “start of the internet moment” in 1995 (almost 1996), not like the tech bubble in 1999.
Investors will hear from Nvidia CEO Jensen Huang, known as the “Godfather of AI,” when the company reports its fiscal second-quarter results on August 28. Huang will talk about the “massive demand trajectory” for AI chips through 2025.
Even though the stock has been very volatile lately, it was still up 151.6% so far this year, making it the best-performing stock in the S&P 500 index 0.20% in 2024. Other AI play Super Micro Computer Inc. SMCI 0.34% is in second place. Its price has gone up 121.2% this year.
