:max_bytes(150000):strip_icc()/GettyImages-2155127651-1beee07173b3430d88c67f1f808ad39d.jpg "Investors Rescue Nvidia Stock From Another Rout")
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Key Takeaways
- Nvidia shares tumbled nearly 7% in early trading Thursday, extending the previous session’s steep decline, before moving into positive territory as investors ‘bought the dip.’
- Nvidia, the poster child for investors looking at AI-related opportunities, has stumbled lately amid a broader rotation out of mega-cap tech stocks.
- Despite recent declines, Nvidia shares are still up more than 130% so far this year.
Shares of Nvidia (NVDA) rebounded from an early morning dive on Thursday as investors ‘bought the dip‘ amid an extension of yesterday’s tech stock sell-off.
Nvidia shares slumped as much as 6.8% Thursday morning, extending Wednesday’s 6.6% decline. The chip giant, which briefly became the world’s most valuable company earlier this year, weighed on the S&P 500, which slipped as much as 0.7%.
Tech stocks sold off yesterday after earnings reports from Tesla (TSLA) and Alphabet (GOOGL) shook Wall Street’s confidence in the AI trade that had propelled stocks to record after record this year. The S&P 500 shed 2.3%, its first daily decline of 2% or more since February 2023. The Nasdaq Composite lost 3.6%, its biggest drop since October 2022.
The AI Poster Child Has Stumbled
Nvidia was the poster child of last year’s bull market. Shares rose 239% in 2023 as booming demand for its AI chips sent sales and profit soaring. The stock gained another 172% this year before the equity market was turned on its head earlier this month.
A soft inflation report on July 11 boosted optimism that the Federal Reserve will cut interest rates soon, sparking an investor exodus from cash-rich big tech companies to the smaller companies that are likely to benefit the most from lower rates. Since then, Nvidia shares have slumped more than 15% while the small-cap Russell 2000 has risen 10%.
TradingView
Despite its recent declines, Nvidia remains the second-best performing stock in the S&P 500 this year, having returned 133%. The stock was up about 0.5% on heavy volume in afternoon trading.