Source: Wall Street See

On Monday night, there was a straight dive, with a closing price of 6.68% down, reaching the largest drop in two months, with the nvidia double long ETF also falling 14%, dragging down the market. It also fell 1.09%. The entire chip sector was hit hard, with a 3.02% drop. They respectively fell 3.7%, 3.54%, and 5.5%. Furthermore, nvidia has fallen for three consecutive days, with a cumulative drop of 12.88%, leading to a market cap reduction of more than $430 billion, falling below the $3 trillion mark and ranking third. Last week, nvidia briefly topped the list of market caps in the US stock market.$NVIDIA (NVDA.US)$ $Nasdaq Composite Index (.IXIC.US)$Please use your Futubull account to access the feature.$PHLX Semiconductor Index (.SOX.US)$closing down 3.02%.$Broadcom (AVGO.US)$, $Taiwan Semiconductor (TSM.US)$ and $Qualcomm (QCOM.US)$respectively down 3.7%, 3.54%, 5.5%.

Furthermore, nvidia has fallen for three consecutive days, with a cumulative drop of 12.88%, leading to a market cap reduction of more than $430 billion, falling below the $3 trillion mark and ranking third. Last week, nvidia briefly topped the list of market caps in the US stock market.

Analysis pointed out that ‘Triple Witching Day,’ frequent cashing out of Nvidia high-level executives and partial investors’ profit-taking all contributed to the sharp decline of Nvidia's stock price. So, is Nvidia really ‘out of fuel’?

How does Wall Street look at this?

Wall Street bulls believe that Nvidia's fast-growing revenue, healthy cash flow and profits, and the possibility of triggering a new round of industrial revolution, have been strong supports for the significant rise in its stock price. Moreover, the drop is only a healthy correction, further raising the company's target price. This optimism is not groundless. Nvidia currently has about 80% of the AI chip market in data centers, and tech giants such as OpenAI, Microsoft, Alphabet, Amazon, and Meta are all vying for its processors to support their AI models.

Media tracking found that Nvidia is still popular on Wall Street and nearly 90% of analysts still recommend buying Nvidia. The average target price of analysts still has a 10% upside from now on. However, the soaring stock price of Nvidia still makes some professionals on Wall Street feel uneasy. They believe that the stock valuation seems to be over-exaggerated and may be ‘over-hyped.’

On Sunday, June 23, BTIG strategist Jonathan Krinsky warned in a report that Nvidia's performance even surpassed that of any US company in the late 1990s technology bubble era, and its stock price has risen by nearly 100% above its 200-day moving average. Since 1990, no US company has been able to become the largest market value company while its stock price is 80% higher than its 200-day moving average. The closest record was Cisco in March 2000, when the stock price of Cisco was 80% higher than its 200-day moving average, marking its historical high.

Nvidia's recent market performance is reminiscent of the technology bubble of 2000. Although the fundamentals are different from the past, Nvidia's stock price has risen by 4,280% in the past five years, which is comparable to Cisco's 4,460% increase in the first five years before its market value reached its peak.

Neville Javeri, head of the Empiric LT Equity team at Allspring Global Investments, pointed out:

"In the short term, investors may feel tired because of the excessive enthusiasm for AI or the deepening concern about the concentration of the index."

However, Tom Lee, managing partner and head of research at Fundstrat Global Advisors, presented a completely different view. In a program, Lee said:

"Generally, investors are not willing to buy high-priced stocks. But if we are now in the middle of an economic cycle, we will reach more new highs in the next five years. A large amount of statistical data shows that the probability of buying at new highs is actually higher than buying at low points."

Lee’s bullish stance stems from the company's unique market position, and he said that Nvidia is a stock with a P/E ratio of 30, selling products that no one else in the world can produce. If Nvidia's valuation is very high (P/E ratio reaches 100) and the market generally looks forward to its future, then my views on Nvidia may be different. Because everyone wants to sell Nvidia and call it a peak, I think it still has a great upside potential.

Charlie Ashley, an investment manager at Catalyst Funds, said:

"The momentum of Nvidia and AI stocks in general is shocking. In terms of investment, I will not adopt a counter-trend operation now."

Editor / jayden