Nvidia's CEO, Jensen Huang, introduced the new AI chip named Blackwell at the company's GTC developer conference. (Photo by Andrej Sokolow/picture alliance via Getty Images)
On Wednesday, Nvidia (NVDA) shares took a significant hit, dropping over 9% to $108 each as the market overall declined on the first trading day of the month. The losses continued with an additional 3% drop in pre-market trading after the Department of Justice issued subpoenas to Nvidia and other firms. The subpoenas are part of a broader investigation into whether Nvidia, a leading provider of AI chips, has breached antitrust laws.
This decline marks Nvidia's lowest level since August 12, making it the weakest performer among the so-called "Magnificent Seven" stocks on Tuesday. The overall market saw a downturn, with technology stocks leading the losses, followed by energy and industrial sectors.
Despite a strong quarterly performance that exceeded expectations, Nvidia's stock did not see a boost. Analysts pointed out that while the company's revenue was impressive, concerns about falling gross margins overshadowed the positive results.
Stacy Rasgon, a senior analyst at Bernstein, mentioned that Nvidia’s short-term troubles were part of a broader market trend. However, Rasgon remained hopeful about the company’s future, suggesting that the upcoming release of Nvidia’s new Blackwell chip in the fourth quarter could potentially drive the stock price up.
Despite the recent downturn, Wall Street analysts remain generally optimistic about Nvidia. Stifel analysts reaffirmed their Buy rating with a $165 price target, citing Nvidia's continued role as a key player in the modernization of data centres.
Nvidia had previously experienced a notable rebound, with its stock rising nearly 25% over three weeks following a global market sell-off. Even with the recent losses, Nvidia’s stock has surged more than 115% this year, highlighting its impressive performance despite the current challenges.
