Nvidia shares jump nearly 7%, after $430 billion market collapse – 06/25/2024 at 10:44 p.m.

Nvidia shares jump nearly 7%, after $430 billion market collapse – 06/25/2024 at 10:44 p.m.
Nvidia shares jump nearly 7%, after $430 billion market collapse – 06/25/2024 at 10:44 p.m.

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

(Updated with closing price, added analyst quote in paragraph 3) by Chibuike Oguh

Shares of Nvidia NVDA.O jumped nearly 7% on Tuesday, emerging from a three-session slide that had wiped about $430 billion from the artificial intelligence chipmaker’s market value.

Nvidia shares closed at $126.09, after a fall that saw them lose about 13% from their June 18 close of $135.58. The drop follows a rally that accelerated after the stock’s 10-for-1 split, which took effect on June 10.

“Today’s rebound is a normal technical rebound after a 15% drop in three days; you don’t go straight down every day,” said Tom Hayes, president of Great Hill Capital in New York. “It’s a big company, a big CEO, and you have insiders selling three-quarters of a billion shares just as retail investors were starting to get involved in the division,” Hayes added. .

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 154% 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.

The recent pullback has helped ease some concerns about Nvidia’s valuation, which now stands at around $3.1 trillion, after hitting a high of around $3.3 trillion earlier this month.

“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 historic peak.”

Optimism towards Nvidia was 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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