• Nvidia’s stock fell more than 6% on Monday as investors rotated out of the AI hottest play of the year
• The stock has declined more than 12% from its all-time closing high last week when Nvidia’s market cap temporarily surpassed Microsoft as the most valuable company
• While analysts remain bullish on Nvidia’s long-term prospects, some warn that the stock’s rally could stall if enterprises and consumers don’t continue paying more for AI features
Nvidia stock fell more than 6% on Monday as investors rotated out of the hottest AI play of the year. The stock has declined over 12% from its all-time high last week when it briefly became the world’s most valuable company.
Nvidia gives back crown as world’s most valuable company
The chipmaker’s market cap is now around $2.9 trillion, below Microsoft‘s and Apple’s valuations above $3 trillion each. Up until last week, Nvidia played a key role in driving the S&P 500 and Nasdaq to repeated record highs this year.
Nvidia completes 10-for-1 stock split
The Santa Clara, Calif.-based company completed a 10-for-1 stock split on June 10. As reported by Yahoo Finance, Wall Street is mixed on whether the recent sell-off signals long-term concerns.
Analysts remain bullish on long-term growth
Bank of America analysts reiterated a Buy rating and $150 price target, calling Nvidia a “top pick.” Jefferies analysts also maintained a Buy rating, raising their target to $150 and calling Nvidia the “king and kingmaker.”
Investors should watch for slowing enterprise demand
However, Patrick Moorhead of Moor Insights & Strategy said investors should watch for signs of slowing profitability among Nvidia’s enterprise customers. He explained that if enterprises aren’t paying more for Nvidia’s AI offerings, “this whole gravy train comes to a screeching halt.”
Correction on Microsoft and Apple valuations
A previous version misstated Microsoft and Apple valuations in billions rather than trillions. Yahoo Finance regrets the error.
