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Nvidia’s value drops by 13% in just three days after reaching top position as the most valuable company.

Following a brief stint at the peak as the world’s most valuable company last week, Nvidia has witnessed a decline for three consecutive trading sessions, resulting in a 13% drop from its zenith. The chipmaker encountered its second-largest tumble of the year on Monday, with the stock plunging 6.7% to $118.11. Nvidia’s downturn dragged down chipmakers and other tech firms associated with the artificial intelligence surge.

Companies such as Super Micro Computer, known for selling servers embedded with Nvidia’s AI chips, experienced an 8.7% decline, while Dell, a competitor in the same market segment, saw a 5.2% drop. Arm, a chip designer, dipped 5.8%, and semiconductor giants Qualcomm and Broadcom succumbed to reductions of 5.5% and 3.7%, respectively. These entities had notably been major gainers over the past couple of years, with investors banking heavily on them to reap the benefits of increased AI expenditure.

Despite the three-day slump, Nvidia’s valuation has almost tripled in the past year. It managed to surpass Apple and Microsoft as the most valuable U.S. company last week, boasting a market capitalization exceeding $3 trillion before relinquishing some of these gains. On Monday, Nvidia ranked as the fourth most significant decliner in the S&P 500. Super Micro still retains nearly a 200% increase in value for the year 2024.

Market observers speculate that investors are seizing the opportunity to secure profits following a bullish stretch. According to Stephanie Link from Hightower, Nvidia’s stock, in her opinion, has become “overloved,” prompting individuals to explore other tech sectors offering more attractive risk-reward ratios.

Despite these challenges, Nvidia emphasizes sustained demand for its AI GPUs, with major players like Microsoft, Google, Amazon, Oracle, and Meta acquiring billions worth of chips for their data centers and cloud services. The imminent launch of Nvidia’s next-gen AI chips, dubbed Blackwell, is anticipated to instigate another growth phase for the chipmaker and its affiliates.

Ray Wang, the founder of Constellation Research, projects that Nvidia’s positive trajectory is set to continue for the next 18-24 months, terming the current moment as opportune for purchasing the dip. Analysts foresee corrective phases in Nvidia’s journey but advise investors to remain steadfast in their commitment amid the volatility.

VIEW: Nvidia set for corrections but advocates urging investors to stay the course.

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