Nvidia shares slumped more than 2% on Monday, putting the AI chip darling officially in correction territory.
The chipmaker and de facto artificial intelligence trade has rallied 165% this year amid ongoing excitement for the buzzy technology trend. However, shares have faced a sluggish stretch as of late. The stock is down 5% in December and officially in correction territory, sitting about 12% off their closing high of $148.88 reached last month.
The definition of what comprises a market correction can vary. Many generally regard it as a drop of 10% or more from an all-time high.
The recent underperformance in Nvidia could signal some profit taking on Wall Street after another marquee year. The maker of graphics processing units underpinning large language models has benefitted as datacenter demand swells since ChatGPT’s late-2022 launch.
But there are some reasons for concern for the market leader and fundamental player among the three major averages. The market has continued powering to new highs as Nvidia underperforms. That could be a warning signal if the pattern continues, with Roth MKM noting that the $125 to $130 level marks a key test for the stock and the overall market.
As Nvidia struggles, other chipmaking stocks have fared well, with Broadcom powering to new highs. The stock surged around 8% during Monday’s session. Other semiconductor stocks also gained Monday, with Micron Technology last up about 7% ahead of its quarterly results. Marvell Technology gained 2%, while On Semiconductor, Lam Research and Taiwan Semiconductor added at least 1%.