NVIDIA, the AI semiconductor powerhouse, has experienced a significant decline in its stock price, which recently fell below $140. This has raised concerns about its market position. Once a driving force behind the U.S. stock market’s growth, NVIDIA now faces calls for new leadership in the tech sector.
On Wednesday, Larry Tentarelli, the chief technology strategist at Blue Chip Trend Report, analyzed NVIDIA’s stock performance. He pointed out that NVIDIA’s stock has declined approximately 14% from its recent peak, currently trading around $130. In contrast, the Nasdaq-100 ETF (QQQ) tracks the tech sector closely and continues to reach new highs. This indicates a shift in the market, which seems to seek new leadership and not solely depending on NVIDIA’s performance. Tentarelli also mentioned that after its impressive rally earlier in the year, NVIDIA is now experiencing a healthy consolidation phase, with other blue-chip stocks like Tesla and Broadcom emerging as leaders in driving the market’s ascent.
Broadcom, in particular, has emerged as a formidable challenger to NVIDIA’s dominance. On December 13, Broadcom’s stock price surged by 24.4% and has continued its upward momentum since. The company’s market capitalization, which surpassed the $1 trillion mark on the same day, has now grown to $1.122 trillion. This rapid growth can be attributed to major tech companies partnering with Broadcom to develop their own AI chips, reducing their dependence on NVIDIA’s offerings.
During its quarterly earnings call on December 12, Broadcom announced that it is collaborating with three major cloud companies to develop AI chips. While the companies were not named, they are believed to include Meta, the parent company of Facebook, and ByteDance, the Chinese company behind TikTok.
In contrast, NVIDIA’s stock continued to decline, dropping nearly 1.8% in pre-market trading on December 17, with shares trading at $129. Analysts had previously warned that a dip below $132 could signal trouble for the company. News of an antitrust investigation by Chinese authorities compounded NVIDIA’s challenges, further fueling the stock’s decline. The company has since lost momentum in its attempt to reclaim the $150 level, which remains below $140.
Despite these setbacks, Tentarelli remains cautiously optimistic about NVIDIA’s future. He commented, “While NVIDIA faces increased competition from emerging AI companies, its potential to meet sector-specific demands remains robust.”
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