There is no doubt about that Nvidia (Nasdaq: NVDA) He has been the leader of the Artificial Intelligence (AI) revolution so far. The stock has jumped nearly 10 times since the beginning of 2023, shortly after ChatGPT was launched.
It rose to become the world’s most valuable company this year, although it has since relinquished that position to apple. Nvidia’s strength was on display in its latest earnings report as the company posted another round of impressive results. Revenue jumped 94% to $35.1 billion, and adjusted net income more than doubled to $20 billion, or $0.81 per share.
Nvidia shares peaked after its third-quarter earnings report on November 21 at a share price of $152.89. However, something surprising happened shortly afterwards. Nvidia stock began to decline even as the broad market continued to rise as investors seemed to believe that valuation had become highly inflated again. As of December 17, less than a month later, the stock is now down 15% from that peak after falling for four consecutive sessions in a row.
There was no major news that caused Nvidia to decline and no particularly big one-day moves. Perhaps the biggest element is that China has opened an antitrust investigation into the company, according to Bloomberg, in connection with its 2019 acquisition of Mellanox, which makes networking products for servers and storage equipment.
Concerns about a shift in AI spending away from Nvidia’s core, increased competition, and the fact that AI has yet to penetrate at the consumer or end-user level have weighed on the stock.
The stock also pulled back after that Broadcom It provided strong guidance for AI in its fiscal fourth-quarter earnings report last week. While Broadcom doesn’t compete directly with Nvidia, its results, which included 220% growth in AI in 2024 and guidance for 65% growth in the first quarter, show that the spoils in the AI race may finally be starting to spread beyond Nvidia.
Investors, especially those with big profits in Nvidia, may finally feel it’s time to diversify into other chip stocks.
Although the stock fell after the initial earnings rise, Nvidia’s prospects still look as strong as they did when the company reported earnings a month ago.
The hectic issues that delayed the launch of the new Blackwell platform have been resolved and continue to see demand significantly outpace supply for its new components. CEO Jensen Huang called demand for Hopper and the new Blackwell platform “incredible,” and CFO Colette Kress said demand for Blackwell will exceed supply for several quarters through fiscal 2026, or the next calendar year.
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