Nvidia shares have fallen for three consecutive trading days since peaking on the 18th (local time). There is also a sense of anxiety that the "second dot-com bubble" collapse, reminiscent of the plunge in Cisco stock prices in the early 2000s, may have entered.
On Wall Street, Nvidia shares are likely to fall to $100 per share in the short term, but the target is expected to continue to be strong from a mid- to long-term perspective.
On the 24th, Nvidia stock price fell 6.68% in a single day, closing at $118.11 and entering a technical adjustment phase. Technical adjustment refers to a decline in stock prices by more than 10% compared to the relevant point.
Nvidia shares closed at $135.58 on the 18th, setting an all-time high based on the closing price. It is up 180% from the beginning of the year. However, it has fallen nearly 13% over the three trading days since then as the sell-off has been highlighted. During the period, the market capitalization decreased by $430 billion (about 596.152 trillion won). As a result, the market capitalization is $2.91 trillion, widening the gap between Microsoft (3.33 trillion dollars) and Apple (3.19 trillion dollars).
Nvidia's twice-leveraged betting exchange-traded fund (ETF), which has been popular among Korean investors, also saw its market price plunge. The GranitShares 2X Nvidia Daily ETF (NVDL) market price fell 14% on the day, down nearly 25% from the 18th to the day.
The background of Nvidia's sale is attributed to the fluctuation of investor sentiment due to the burden of overvaluation of stock prices and the news of Nvidia CEO Jensen Huang's treasury stock sale.
"Demand for semiconductors in the AI era is bound to increase, but Nvidia's stock price jumped 238% last year and surged this year, which is excessive," said Buff Dormeyer, a researcher at Kingsview Partners. "The stock price is the highest among S&P 500-incorporated stocks compared to sales in the next 12 months."
Some recall that NVIDIA's stock price has fallen for three consecutive trading days, and that Cisco's stock price, which was the No. 1 company in market capitalization during the dot-com bubble burst in the early 2000s, plunged. Cisco shares plunged 80% after the bubble burst at the time.
However, more analysts in the securities industry say that Cisco and Nvidia, whose stock prices rose only with expectations without profit growth, are different. According to Samsung Securities, Nvidia's 12-month forward price/earnings ratio (PER) is 42 times higher. It is lower than Nvidia's past peak of corporate value (68 times), and there is no significant difference compared to the average PER (40 times) over the past decade. This contrasts with the fact that Cisco's 12-month advanced PER exceeded 120 times during the dot-com bubble. Seo Jung-hoon, a senior researcher at Samsung Securities, said, "The recent decline in Nvidia stock prices is a reasonable adjustment process."
Bloomberg believes that it is different from the past in that the return on equity (ROE) of Nvidia and other "Magnificent 7" companies that led the rise in AI has improved. Currently, ROE of seven companies averages 27%, higher than in 2020 (21%).
Regarding the direction of Nvidia's stock price, experts pointed out that it is important to support $100 in the short term.
"NVIDIA shares have recently plunged, but they are still well above the 50-day moving average of $101 or the 100-day moving average of $92," said Ari World, a senior researcher at Oppenheimer Securities, pointing to the possibility of further adjustment. The news of CEO Hwang's treasury stock sale also worsened investor sentiment. According to the U.S. Securities and Exchange Commission (SEC), CEO Hwang reported that he sold a total of 720,000 Nvidia shares from the 13th to the 21st of this month in accordance with the 10b5-1 regulations.
[Reporter Kim Inoh / Reporter Cha Changhee]
