Technology
Wednesday, April 10th, 2024 2:18 pm EDT
Key Points
- Nvidia enters “correction territory”: Nvidia’s shares have declined by 10% from their recent all-time closing high, signaling a correction in the market.
- Nvidia’s role in the AI boom: The company, known for its graphics processing units (GPUs), has benefited significantly from the artificial intelligence (AI) boom, with its chips being widely used in compute-intensive AI applications, including OpenAI’s ChatGPT AI chatbot, and serving as a key component in data centers.
- Factors contributing to the decline: While Nvidia’s financial performance has been robust, with a 486% jump in non-GAAP earnings per diluted share in the December quarter, its shares have faced pressure over the past two weeks. Possible reasons for the decline include profit-taking by investors following a significant gain in the past year and competition from rival chipmaker Intel, which introduced a new AI chip claimed to outperform Nvidia’s GPU in terms of power efficiency and speed in running AI models. Analysts also anticipate a decline in demand for Nvidia’s stock over time due to factors such as the emergence of smaller AI models and increased reliance on proprietary chips by major customers.
Nvidia, a leading chipmaking company, has experienced a 10% decline in its shares, putting it into “correction territory” from its recent all-time high. The company, known for its graphics processing units (GPUs), has thrived due to the artificial intelligence (AI) boom, which has increased demand for its chips, especially in compute-intensive AI applications and data centers. Despite reporting a remarkable 486% surge in non-GAAP earnings per diluted share in the December quarter, driven by massive chip demand fueled by the popularity of generative AI models, Nvidia’s stock has faced pressure over the past two weeks. The shares dropped 10% from their peak on March 25, closing at $853.54 on Tuesday. The exact reason for the decline remains unclear, but potential factors could include profit-taking by investors following a significant gain of over 200% in the last 12 months and competition from rival chipmaker Intel, which unveiled a new AI chip called Gaudi 3 claimed to outperform Nvidia’s GPU in terms of power efficiency and speed in running AI models. Analysts at D.A. Davidson anticipate a decline in demand for Nvidia’s stock over time due to factors such as the emergence of smaller AI models, steady growth in demand, and increased reliance on proprietary chips by major customers. While Nvidia declined to comment on the situation, the market correction underscores potential challenges ahead for the chip giant despite its recent financial success.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/04/10/nvidia-nvda-stock-down-10percent-from-highs-in-correction-territory.html
