Since last week’s earnings report, Nvidia Corp.’s stock has been going down.
The stock has gone down in four of the six trading sessions since the report, and this week it was under the most pressure. According to Dow Jones Market Data, it had its worst week in two years. Shares of Nvidia (NVDA) fell 13.9% this week and 16.1% in the week ending September 2, 2022.
Nvidia lost $406 billion in market value over the course of the week. This was the biggest drop in market value for any U.S. company ever, and it was more than the total market capitalizations of AMD (-3.6%) and QCOM (-3.37%). The market value of Nvidia is now about $2.5 trillion.
Last week’s earnings report from Nvidia showed some things that the market might still be processing. One thing is that the company had a smaller beat than normal, which makes people wonder how long Nvidia will be able to keep up the amazing performance that made it a Wall Street favorite over the past two years. Another worry is how the margins will change in the near future.
Also, the market as a whole is under a lot of stress. The S&P 500 SPX -1.73% had its worst week since March 10, 2023. And there is weakness in the chip industry as a whole: Another big chip company that is betting on AI, Broadcom Inc. AVGO -10.36%, had better-than-expected overall results on Thursday, but its semiconductor business didn’t do as well.
What will happen next with Nvidia shares? Jordan Klein, a desk-based analyst at Mizuho, wrote on Friday that the price “is not ripping back to $130+ in coming weeks.” It was just below $103 when it closed on Friday.
Klein says that the sector as a whole is “stuck in the mud at best right now, barring a bunch of better’soft landing’ macro data points over the next few weeks.” Before Friday’s market opened, he wrote a note saying that he thought chip stocks would go down before they went up in the short term.
On Friday, the PHLX Semiconductor Index SOX -4.52% went down 4.5%.
“Don’t feel rushed to sell semis, but don’t feel rushed to buy weak stocks either,” Klein wrote.
In a note released Thursday morning, Vivek Arya of BofA pointed out “several headwinds” for Nvidia. However, he remained positive about the stock overall and set a price target of $165.
One of the problems? There are still questions about whether AI is making money as expected, as well as the possibility of governmental pressure and market volatility.
But Arya believes that Nvidia shares have “compelling growth at compelling valuation.”
“The most important thing for fundamental recovery will probably be supply-chain data points over the next few weeks that show that new Blackwell products are ready to be shipped,” he wrote.
