While the broader stock market has shown signs of recovery this week, chipmaking titan Nvidia has not mirrored that upward trajectory. Despite a broad-based rally in the S&P 500, Nvidia shares fell slightly by 0.2% on Friday, capping a weekly decline of about 2.4%. That decline is in stark contrast to the overall market’s minimal decline of just 0.04% for the same period, and starkly different from the performance within its own sector; the iShares Semiconductor ETF (SOXX) ended the week with a gain of 2.4%.
Analysis of Nvidia's recent difficulties
Nvidia’s stock underperformance could be attributed to expected setbacks with the launch of new Blackwell chips, which could potentially stall the company’s impressive 111% growth in 2024, fueled in large part by a surge in AI technology.
Despite the stock’s recent downtrend, Bank of America analyst Vivek Arya remains bullish on Nvidia’s core strengths and the competitiveness of the market. Arya shared his thoughts on a recent episode of CNBC’s “Squawk Box,” explaining, “Current market fluctuations appear to be unrelated to the semiconductor sector. However, it’s important to recognize that the sectors that have seen significant gains due to advances in artificial intelligence are also the ones most susceptible to sharp declines amid market volatility.”
This nuanced view highlights the complex interplay between market expectations and real-time performance in industries that are heavily influenced by technological advances.