In what can be considered a rare occurrence based on recent performances, the stock price of semiconductor giant Nvidia (NASDAQ: NVDA) has recorded successive sessions of losses.
The downturn continued on Wednesday, July 17, with Nvidia losing its $3 trillion market cap. At some point, the equity erased $170 billion from its market, bringing the value down to $2.9 trillion.
Regarding the short-term price movement, NVDA aims to reclaim the $120 mark. At the time of reporting, the stock was valued at $118, with daily losses exceeding 6%. On the weekly chart, NVDA is down almost 12%. However, on a year-to-date basis, the stock remains in the green with 145% gains.
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Why is Nvidia down
Several factors could explain Nvidia’s stock performance. Recently, the stock has been impacted by a general shift away from large technology stocks. Notably, Finbold reported that small-cap stocks had outperformed the tech-heavy Nasdaq 100, signaling a realignment in investor interest.
Additionally, Nvidia might be affected by geopolitical issues emanating from the White House. Reports indicate that the Joe Biden administration informed allies in Japan and the Netherlands that it may invoke the foreign direct product rule to limit sales to China. This move would allow the U.S. to impose controls on any company that uses any amount of U.S. technology.
Additionally, comments from Republican presidential front-runner Donald Trump have further pressured Nvidia and the semiconductor sector. Trump stated that Taiwan should pay the U.S. for defense and claimed Taiwan took “about 100%” of America’s semiconductor business.
These comments have raised concerns about the U.S. commitment to defend Taiwan if Trump is reelected and in the event of a Chinese attack. It’s worth noting that Nvidia heavily depends on TSMC’s (NYSE: TSM) facilities in Taiwan.
Implication on semiconductor space
It’s worth noting that if Nvidia’s crash sustains, it could significantly affect the stock market, considering that tech giants venturing into artificial intelligence (AI) have dominated the space.
For instance, the recent S&P 500 rally has mainly been attributed to the dominance of firms such as Nvidia, and a possible crash could pose adverse risks to the overall sector.
Meanwhile, several analysts have maintained that Nvidia is destined for a crash based on factors such as historical performance and buying activity. As such, some analysts have placed the next NVDA target at $110.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
