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MW Nvidia's stock heads for dramatic reverse lower not seen in over two years

By Emily Bary

'It's called exhaustion,' analyst says in wake of frenzied rally

Nvidia Corp.'s stock has been nearly invincible lately and initially seemed on track Friday to log its seventh session in a row of gains - before a dramatic reversal lower.

The stock was up as much as 5.1% Friday morning, before sharply changing course to be down 3.9% in recent action. The last time Nvidia's stock $(NVDA)$ was up at least 5% intraday but ended the session lower was Jan. 27, 2022, when it rose as much as 5.4% but finished off 3.6% according to Dow Jones Market Data.

"It's called exhaustion," Mizuho desk-based analyst Jordan Klein told MarketWatch in an email. Semiconductor stocks have been "way overbought and when they start to fade, you see the quant machines sell and then retail worries and it just accelerates."

He added that investors should keep in mind that Nvidia and other AI-winner stocks in the chip sector "cannot trade up every single day," as they seemingly and unnaturally had been lately.

He had commented Thursday morning that the explosive positive momentum for Nvidia and some AI-linked semiconductor peers seemed "a bit unhealthy" and reminiscent of the frenzied tech-market mindset of 1999 and 2000.

While shares of chip companies Broadcom Inc. $(AVGO)$ and Marvell Technology Inc. $(MRVL)$ opened the session lower after their earnings reports last night showed pressure in segments unaffected by artificial intelligence, other chip stocks like Advanced Micro Devices Inc. $(AMD)$, and Super Micro Computer Inc. $(SMCI)$ saw positive momentum shortly after the open.

Don't miss: Broadcom earnings spotlight tech's growing AI 'dichotomy'

But the broader chip sector moved lower midmorning, and only four members of the PHLX Semiconductor Index SOX - Allegro MicroSystems Inc. $(ALGM)$, Wolfspeed Inc. (WOLF), Coherent Corp. $(COHR)$ and Skyworks Solutions Inc. $(SWKS)$ - were ahead in recent action. That index itself was down 3.0% in midday action.

Nvidia had been responsible for roughly half of the S&P 500's SPX advance at its peak earlier Friday, according to FactSet data, but the index was down 0.4% in recent activity. The Nasdaq Composite Index was off 0.7%.

-Emily Bary

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March 08, 2024 13:08 ET (18:08 GMT)

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