AI News: NVIDIA Stock Falls To 2-Month Low As Hype Blows Over

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After reigning consistently as the most capitalized company, Nvidia (NVDA) has seen its stock value drop to a two-month low. Within five weeks, the Artificial Intelligence (AI) and chip manufacturer lost $1 trillion from its stock market cap, with every one of those weeks seeing a loss of $200 billion.

The Nvidia Performance To Date

Accordingly, the AI giant has lost approximately 27% of its previous All-Time High (ATH). This loss compared to Tesla’s entire value is 1.5 times bigger and equal to the total market cap of Berkshire Hathaway. Noteworthy, NVDA’s current woe did not come from a single event. Rather, it resulted from a pile-up of small trends one of which is the general dip across semiconductor stocks.

BREAKING: Nvidia, $NVDA, has now erased $1 TRILLION of market cap since its all time high set on June 20th.

In other words, $NVDA has erased $200 billion of market cap PER WEEK over the last 5 weeks.

The stock is now down ~27% from its recent all time high.

In just 5 weeks,… pic.twitter.com/eBooT5WEMc

— The Kobeissi Letter (@KobeissiLetter) July 30, 2024

The performance of NVDA also mirrors that of Bitcoin (BTC) with more than 11% loss from its ATH.

President Donald Trump’s hawkish commentary on trade and defense policies in East Asia fueled this incident. The said region is important to American chip makers, especially as it has to do with manufacturing and sales.

It’s not news that a stock faces a decline after an extended period of gains. This is because investors and fund managers begins to cash in on their profits and adjust their portfolios. In the meantime, NVDA remains up by 110% year-to-date and 610% compared to the end of 2022.

At this level, the stock is delivering truly eye-popping returns for a company of its size.

Can AI, Macroeconomics, and Politics Changes Shift The Trend?

The semiconductor company is likely the clearest victim of the broader market’s rollout of big technology companies into lagging smaller firms especially with investors preparing for the first interest rate cuts since 2020.

Noteworthy, the anticipation for this interest rate cut is growing and former Federal Reserve Vice Chair Roger W. Ferguson has projected US Fed rate cut in September. The slowdown of inflation and consumer prices has informed this prediction.

On the other hand, the AI landscape has seen the launch of some new tools including OpenAI’s SearchGPT.

The popular AI firm introduced a new search engine that is likely to compete with Google last week. In the meantime, it is still in the beta testing phase and OpenAI plans to compete the process with a small group of users and publishers for now, with the hope that they provide feedback to refine the tool before integrating it into ChatGPT.

In all, the Nvidia sentiment hinges also on the election season. As the Kamala Harris and Donald Trump rivalry wages on, the AI market will decide which candidate is good for the industry in due course.

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