Nvidia shares jump more than 5% after $430 billion market collapse – 06/25/2024 at 8:48 p.m.

Nvidia shares jump more than 5% after $430 billion market collapse – 06/25/2024 at 8:48 p.m.
Nvidia shares jump more than 5% after $430 billion market collapse – 06/25/2024 at 8:48 p.m.

((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))

(Updated prices and added chart) by Chibuike Oguh

Shares of Nvidia NVDA.O rose more than 5% on Tuesday, poised to end a three-session slide that wiped about $430 billion from the artificial intelligence chipmaker’s market value.

Nvidia shares were recently at $124.71, following a drop that saw them down about 13% from their June 18 closing level. The drop follows a rally that accelerated after the stock’s 10-for-1 split, which took effect on June 10.

“This is a normal correction for a company that has launched and received a lot of publicity,” said Tom Plumb, managing director and portfolio manager at Plumb Funds, one of whose principal holdings is Nvidia. “Until there is confirmation that actual activity justifies the slowdown in momentum, I don’t think we’ve reached the all-time high.”

Nvidia’s meteoric rise and position as the dominant supplier of chips for artificial intelligence applications has made it emblematic of the boom in U.S. tech stocks this year.

Shares of Nvidia, which briefly last week became the world’s most valuable company , are up 152% this year and have accounted for nearly 30% of the S&P 500 .SPX’s year-to-date return as of Monday’s close, according to S&P Dow Jones Indices. The index is up 14.6% this year.

Optimism about Nvidia has been evident in the options market, although the recent drop in the stock price appears to have made traders more cautious.

Call options on Nvidia, typically used to bet on a rise in the stock price, have outperformed puts by a ratio of 1.4 to 1 over the past three sessions, according to Trade Alert data . In comparison, the ratio of calls to puts was 1.6 to 1 over the last 10 sessions.

At the same time, Nvidia short sellers, who are betting on a decline in the stock, have earned $4.97 billion over the past three sessions combined, according to data analytics firm Ortex Technologies.

Separately, retail investors likely bought stocks during the recent decline, said Mario Iachini, senior vice president at Vanda Research, which tracks individual investor behavior.

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