Ann Wang/Reuters
Device with an Nvidia logo spotted in Taipei, Taiwan in June 2024.
London
CNN
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Shares in US chipmaker Nvidia recovered on Tuesday after days of selling pressure caused it to lose its position as the world’s most valuable publicly traded company.
Nvidia shares ended up nearly 7% on Tuesday, reversing a three-day losing streak, raising concerns among some investors that the company may be denting hopes for a key role it is expected to play in the artificial intelligence revolution.
“We believe in AI, but have seen signs of over-excitement in U.S. markets over the past month,” Deutsche Bank research strategist Jim Reed wrote in a note on Monday.
On June 18, the semiconductor giant’s market capitalization hit $3.34 trillion, surpassing Microsoft to become the world’s most valuable company. But over the next three trading days, the company lost $430 billion.
Despite NVIDIA’s stock price rally on Tuesday, the company’s market capitalization is now Microsoft (MSFT) and Apple (AAPL) fell to third place with market caps of $3.35 trillion and $3.21 trillion, respectively.
“What we’re seeing with Nvidia is typical volatility, which is to be expected when a stock price rises as sharply as Nvidia has,” Jochen Stanzl, chief market analyst at trading platform CMC Markets, told CNN.
Nvidia’s shares soared, rising more than 161%. The company’s chips are powering AI systems, including Generative AI, the technology behind OpenAI’s ChatGPT, which can create text, images and other media.
Enthusiasm over the potential for AI to fundamentally change the way we live and work, and generate big benefits for investors, has driven much of the stock market’s gains over the past year and a half.
Yi-Hwa Chen/AFP/Getty Images
Nvidia CEO Jensen Huang speaks at the Computex technology trade show in Taipei, Taiwan, in June 2024.
Nvidia is part of the so-called Magnificent Seven, a group of giant technology companies whose share prices have risen much more than the overall U.S. stock market last year. While the S&P 500 index is up 24.2% so far this year, the Magnificent Seven’s stock prices have risen more than 100% on average.
Deutsche Bank said in a note on Monday that the dominance of seven stocks “has pushed the U.S. equity market close to its most concentrated state on record.” The bank wrote on Tuesday that a day earlier’s decline in Nvidia shares “dragged U.S. equity returns broadly.”
On Tuesday, Nvidia’s gains lifted the tech-heavy Nasdaq index, which rose 1.3%. The S&P 500 0.4% increase The Dow Jones Industrial Average also fell 1.2% on Tuesday. Decreased by 0.8%.