Stay Nvidia Corp. as the most valuable company in the world did not last long.
Shares of the semiconductor giant have fallen 6.7% over the past two days, wiping out more than $220 billion in market capitalization and displacing the company as the world’s largest stock. Nvidia’s market capitalization was about $3.1 trillion on Friday, lower than Apple Inc. with $3.2 trillion and Microsoft Corp. from $3.3 trillion.
It was a quick turnaround from earlier this week, as Nvidia rallied to leapfrog its mega-cap rivals into pole position. Traders say there were no fundamental reasons for the two-day sell-off at the end of the week, but it highlights frantic pace how the stock has risen – nearly 200% in the last year alone – and how that rise now leaves it vulnerable to sudden drops like this one.
“These are normal fluctuations in the stock market, which in the case of such large companies can erase or increase their market value by hundreds of millions or even billions of dollars,” said Russ Mold, investment director at AJ Bell. “Nothing went wrong. at Nvidia.”
Some expected some dramatic change in the situation in the short term. In a June 19 note, analysts led by Vivek Arya of Bank of America Corp. said that “Nvidia’s sharp rise leaves it vulnerable to profit-taking, but we believe any volatility is likely to be short-lived.” The group reiterated its Buy rating, $150 price target and Overweight status on the stock.
However, bulls see further upside potential for the stock. Analysts led by Melius Research’s Ben Reitses on Friday raised their price target on the stock to $160 from $125, their fifth hike of the year.
“We continue to believe Nvidia is in better shape than some of the SaaS ‘leaders’ who have yet to prove that AI is, in our view, playing an important role in this story,” Rightses wrote, referring to firms offering software as a service. “In fact, one could argue that Nvidia should gobble up an even larger portion of the enterprise software market cap as profits flow into their stack.”
The decline also comes amid a broader market retreat as options expire in what is known as a period. triple witchcraftAt the same time, as the S&P Dow Jones index changes its weightings on companies, ETFs that track its performance make similar changes. This move could lead to market turbulence that could impact individual assets.