On Tuesday, Nvidia's stock price surged nearly 7%, ending a three-day decline that had wiped out about $430 billion from the AI chip maker's market value.
Nvidia's stock closed at $126.09, after falling approximately 13% from $135.58 on June 18. This followed a rapid rise in Nvidia's stock price after a 10-for-1 stock split on June 10.
"The significant rebound is a normal technical correction after a three-day, 15% drop—it can't fall in a straight line every day," said Tom Hayes, chairman of New York's Great Hill Capital. "This is an excellent company with an outstanding CEO. When retail investors flocked in due to the stock split, insiders sold stocks worth $750 million," Hayes added.
Nvidia's astounding growth and its position as a key chip supplier for AI applications have made it a symbol of the tech-driven boom in the U.S. stock market this year.
According to S&P Dow Jones Indices, Nvidia's stock price has risen 154% this year as of the close of business on Monday, accounting for nearly 30% of the S&P 500's year-to-date return. The index has risen 14.6% this year.
The recent sell-off alleviated some concerns about Nvidia's valuation, which is currently around $3.1 trillion, down from a peak of about $3.3 trillion earlier this month.
"This is a normal correction for a company that has garnered a lot of attention and has risen rapidly," said Tom Plumb, CEO and portfolio manager of Plumb Funds, which lists Nvidia as one of its largest holdings. "Unless there is confirmation that actual business momentum justifies the slowdown, I don't think it has reached its historical peak yet."
