Nvidia shed $406 billion in market cap this week. What's next for the stock?

By Emily Bary

That's a record weekly loss for any U.S. company - and more than the combined value of AMD and Qualcomm

Nvidia Corp.'s stock continued to bleed in the aftermath of last week's earnings report.

The stock has fallen in four of the six sessions since that report, and it saw especially heavy pressure this week - so much so that it delivered its worst weekly performance in two years, according to Dow Jones Market Data. Nvidia shares (NVDA) lost 13.9% this week; they fell 16.1% in the week ended Sept. 2, 2022.

In all, Nvidia erased $406 billion from its market value on the week, the most for any U.S. company on record, and more than the combined market capitalizations of Advanced Micro Devices Inc. (AMD) and Qualcomm Inc. (QCOM) Nvidia now has a roughly $2.5 trillion market cap.

Nvidia's earnings last week revealed a few items that the market could still be digesting. For one, the company posted a smaller beat than usual, raising questions about how long Nvidia will be able to deliver the sort of eye-popping performance that turned it into a Wall Street darling over the past two years. There are also concerns about margin trends in the near future.

Plus, there are broader market pressures, with the S&P 500 SPX seeing its worst week since March 10, 2023. And the semiconductor sector in general is seeing weakness: Another chip giant that's a play on artificial intelligence, Broadcom Inc. (AVGO), posted better-than-expected overall results on Thursday but came up short in its semiconductor division.

Read: As Broadcom's stock sells off, bulls say you can get this top AI play for cheap

So what's next for Nvidia shares? Mizuho desk-based analyst Jordan Klein wrote Friday that the stock "is not ripping back to $130+ in coming weeks." It was trading just south of $102 at recent check.

The sector on the whole seems "stuck in the mud at best right now outside of a slew of better 'soft landing' macro data points over next few weeks," according to Klein. His note, put out before Friday's open, predicted that chip stocks would move lower before they moved higher in the short run.

The PHLX Semiconductor Index SOX was down 4.5% in Friday trading.

See also: Nvidia investors don't need to worry - unless the stock falls below these prices

"No reason to panic and dump semis, but see no reason to rush to add on weakness either," Klein wrote.

BofA's Vivek Arya flagged "several headwinds" for Nvidia in a Thursday morning note, though he stayed bullish on shares overall, with a $165 price objective.

Among the issues? Potential regulatory pressure and market volatility, as well as continued questions about whether AI monetization is living up to expectations.

But Arya thinks Nvidia shares boast "compelling growth at [a] compelling valuation."

"The key fundamental recovery catalyst will likely be supply-chain data points over the next several weeks, confirming the readiness of new Blackwell product shipments," he wrote.

Don't miss: Nvidia's stock-buyback plan is one of the biggest of 2024. Is that a good thing?

-Emily Bary

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09-06-24 1641ET

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