Nvidia stock plunges below $171, raising concerns about AI boom

Nvidia's stock has dropped below its 50-day moving average of $171.02 for the first time since May, plunging 7% in a four-day losing streak and cutting its market value by over $340 billion. Traders now worry the AI hype has peaked, with the next key level at $160. Despite recent gains, the stock has gone nearly vertical this year and faces pressure from both sides, as China pushes its AI Plus plan with massive investment into homegrown chips and a nationwide supercomputing buildout.

Nvidia Corporation's (NASDAQ:NVDA) stock has experienced a significant downturn, falling below its 50-day moving average of $171.06 for the first time since May. The stock has declined by 7% over a four-day period, leading to a substantial reduction in its market value of over $340 billion. This drop has raised concerns among investors about the potential peak of AI hype and the stock's future prospects.

The recent decline has been attributed to various factors, including geopolitical tensions and concerns over the pace of AI infrastructure spending. Nvidia's stock has been under pressure from both sides, with China's AI Plus plan and nationwide supercomputing buildout adding to the uncertainty. The next key support level for the stock is seen at $160, according to Kingsview Partners' chief technical analyst, Buff Dormeier [1].

Despite the recent setbacks, Nvidia's stock has seen substantial growth this year, with the stock up over 80% from its April low. The company's strong performance in the second quarter, with revenue of $46.7 billion and earnings per share (EPS) of $1.05, highlights the ongoing demand for AI infrastructure. However, the slowdown in sequential growth and the potential impact of China's export restrictions remain concerns for analysts [2].

Nvidia's strong financial position, with a market capitalization of $4.24 trillion and a cash balance of $56.8 billion, provides a solid foundation for the company to navigate the challenges ahead. The stock's valuation remains within range of sector peers, with analysts expecting earnings to grow by 41% in the next fiscal year [2].

The stock's recent decline has also been influenced by broader market conditions, with the tech sector facing uncertainty due to slowing semiconductor demand and cyclical swings in the core GPU business. Analysts have become more cautious, with some moving their ratings to reflect the growing uncertainty around AI-driven sales and inventory adjustments in the semiconductor supply chain [3].

In conclusion, Nvidia's stock has experienced a significant drop, with the market value declining by over $340 billion. The next key support level is seen at $160, and the stock faces pressure from both sides, including China's AI Plus plan and the broader tech sector's uncertainty. Despite the recent setbacks, Nvidia's strong financial position and ongoing demand for AI infrastructure provide a solid foundation for the company's future prospects.

References:
[1] https://finance.yahoo.com/news/nvidia-340-billion-rout-drags-162836982.html
[2] https://www.tradingnews.com/news/nvidia-stock-forecast-nasdaq-nvda-balances-174-usd
[3] https://cryptorank.io/news/feed/64f8d-nvidia-stock-stumbles-below-key-support-as-340b-market-value-evaporates