Nvidia stock is down 5%, extending the slide into correction territory

Nvidia (NVDA) stock fell as much as 5% on Monday as investors exited the year’s hottest AI games. The session marked the third straight day of losses for the heavyweight chip stocks as they slid into correction territory.

The stock is down more than 11% from its all-time closing high of $135.58 last Tuesday, when Nvidia’s market cap temporarily unseated Microsoft ( MSFT ) as the most valuable company. Anything beyond a 10% decline from the recent high is considered a correction zone.

Since then, the chipmaker has reclaimed the crown with a market capitalization of about $2.9 trillion, less than Microsoft and Apple’s (AAPL) valuation of more than $3 billion each.

As of Thursday of last week, Nvidia had played a pivotal role in boosting the S&P 500 (^GSPC) and Nasdaq (^IXIC) to repeat record highs in 2024.

The Santa Clara, California-based company completed a 10-for-1 split on June 10.

As Yahoo Finance’s Allie Canal recently reported, Wall Street is mixed on whether the recent sell-off signals longer-term concerns about the stock.

“The stock’s sharp rise makes it vulnerable to profit taking, but we dispute any volatility [is] “Likely short-term,” Bank of America analysts said in a note last week, reiterating a buy rating and $150 price target while calling Nvidia a “top pick.”

Over the weekend, Jefferies analysts maintained a buy rating on the stock and raised their price target to $150 from $135, calling Nvidia a “king and kingmaker.”

Meanwhile, investors should be wary of signs that the downturn is here to stay, Patrick Moorhead, founder and CEO of Moor Insights & Strategy, told Yahoo Finance on Friday.

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Although he doesn’t see the status quo of Nvidia’s dominance changing over the next six to nine months, investors should focus on “the bottom line profitability that people in the ecosystem are achieving or not achieving.”

“These are software companies like Adobe, Salesforce, SAP, and ServiceNow. Because if those companies and those consumers don’t pay more for these new AI features, this big train will come to a grinding halt, as we saw in the dot-com bust.”

Nvidia CEO Jensen Huang speaks at Computex 2024 in Taipei, Taiwan in June.  (AP Photo/Xiang Yingying, File)

Nvidia CEO Jensen Huang speaks at Computex 2024 in Taipei, Taiwan in June. (AP Photo/Xiang Yingying, File) (News agency)

Ince Ferry is Yahoo Finance’s chief business correspondent. Follow her on X in @ines_ferre.

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