Over the past year and a half, Nvidia’s stock price has been rising rapidly, fueled by demand for components for the hardware of artificial intelligence systems. Yesterday’s speech by the head of the company at SIGGRAPH 2024 and accompanying announcements could not keep Nvidia shares from declining in price by 7% at the end of the trading session.
Image source: NVIDIA
Many large suppliers of semiconductor components are reporting this week, and investors are preparing to take profits in anticipation of not the most pleasant news. Nvidia itself will report its quarterly results much later, so its reporting cannot directly influence the current situation on the stock market. The company’s shares have been losing value since July 10. Nvidia’s capitalization shrank by almost $750 billion, although in June it managed to briefly become the world’s largest public company by this criterion.
The share price of the British developer of processor architectures Arm, which fell by 7% yesterday, also underwent a correction. Analysts believe that the AI PC boom will not be able to fully influence Arm’s revenue in the medium term, since Qualcomm’s controversial Snapdragon X processors will soon face serious competition from products from Intel and AMD.
The general correction in the segment of companies in the technology sector is dictated by investors’ awareness of the fact that the boom in the stock market cannot last forever, and high capital expenditures in the artificial intelligence segment do not yet provide adequate material returns. The Nasdaq index fell 9% from its peak reached in the middle of the past month. According to analysts at Seeking Alpha, Nvidia could face further declines in its share price in the second half of this year. Current quotes are simply difficult to justify in a rather tense macroeconomic environment. In addition, the experience of previous stock market booms shows that their active phase lasts no more than 12 or 18 months, and the corresponding period in the case of Nvidia shares is just coming to an end.