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Why Nvidia is already falling from its pedestal

© NVIDIA/Lemon squeezer

Bad luck for the champion of Wall Street. Admired for several months, Nvidia has suffered a setback of more than 16% since its historic peak last Thursday indicates Les Échos. In a single session (Monday), the stock lost 6.5%.

In three sessions, Nvidia therefore lost its status as the world's largest capitalization (it only lasted one day) and suffered a drop of 430 billion dollars, bringing its valuation to 2  900 billion dollars. If it remains more valued than all the CAC 40 companies, Nvidia is suffering an unprecedented setback.

This disappointment takes with it the American stock market. On Monday (the day of Nvidia's biggest fall), the S&P 500 fell 0.3% when 70% of other companies recorded an increase.

Return to Earth

Should we be worried?? No, say most analysts (Bank of America, UBS) who only see a return to more realistic values ​​after a meteoric rise. “ The rush towards AI has greatly benefited the biggest tech companies ” explains the investment director at UBS < em>aux Echos.

Overall, Wall Street considers this slump as a breather in the crazy saga of Nvidia. But they are also not counting on new surges like that of January (the action gained 130%). As of this writing, Nvidia stock is trading at around 40 times next year's expected earnings.For comparison, this multiple is 20 for all S&P 500 companies.

Apple and Microsoft back at the top

This slowdown in Nvidia's rise therefore benefits Microsoft and Apple, who regain the first two places in global capitalization. But they could also experience some fluctuations in the coming weeks. The two companies must in fact comply with the requirements of the Digital Market Act in the deployment of their AI.

If Microsoft works closely with the EU, Apple is under threat of a $38 billion fine.Coincidence of timing or desire for revenge, Tim Cook and his lieutenants have decided not to launch certain features of iOS 18 in Europe, including Apple Intelligence, its main innovation. The announcement of Apple-style AI excited the markets, which saw a new cycle of renewal of the iPhone, a product on which most of the company's revenue is based.

  • Nvidia's valuation has suffered a big setback since the start of the week
  • Analysts explain this decline by a return to Earth after a meteoric rise
  • Microsoft and Apple regain the lead of the most valuable companies in the world, but for how long ?

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Teilor Stone

By Teilor Stone

Teilor Stone has been a reporter on the news desk since 2013. Before that she wrote about young adolescence and family dynamics for Styles and was the legal affairs correspondent for the Metro desk. Before joining Thesaxon , Teilor Stone worked as a staff writer at the Village Voice and a freelancer for Newsday, The Wall Street Journal, GQ and Mirabella. To get in touch, contact me through my teilor@nizhtimes.com 1-800-268-7116