Nvidia's shares surge over 5 per cent after $430 billion market slump
US chipmaker’s market capitalisation hit $3.34 trillion on June 18
New York: Shares of Nvidia were up over 5 per cent on Tuesday, poised to snap a three-session tailspin that had erased about $430 billion from the artificial intelligence chipmaker's market value.
Nvidia's shares were recently at $124.71, after a tumble that saw them lose around 13 per cent from their June 18 closing level.
The drop followed a rally that accelerated after a 10-for-1 stock split that took effect on June 10.
"It's a normal correction for a company that has made a run and gotten a lot of publicity," said Tom Plumb, chief executive and portfolio manager at Plumb Funds, which has Nvidia as one of its largest holdings. "Until there's a confirmation that the actual business would justify the slowing of the momentum, I don't think you've reached the all-time peak." Nvidia's breathtaking rise and its position as the dominant provider of chips to support artificial intelligence applications have made it emblematic of this year's tech-driven boom in U.S. stocks.
Shares of Nvidia, which last week briefly became the world's most valuable company, are up 152 per cent this year and have accounted for nearly 30 per cent of the S&P 500's year-to-date return as of Monday's close, according to S&P Dow Jones Indices. The index is up 14.6 per cent this year.
Bullishness on Nvidia was evident in the options market, though the stock's recent share price slide appears to have made traders more cautious.
Nvidia call options, typically used to bet on a rising stock price, outnumbered puts by 1.4-to-1 over the last three sessions, Trade Alert data showed. That compared to a call-to-put ratio of 1.6-to-1 for the prior 10 sessions.
At the same time, Nvidia short sellers, who bet on declines in the stock, have gained $4.97 billion in the past three sessions combined, according to data analytics firm Ortex Technologies.
Meanwhile, retail investors have likely been buyers of the stock on the recent dip, said Mario Iachini, senior vice president of Vanda Research, which tracks the behavior of individual investors.