Nvidia’s run as the world’s most valuable company didn’t last long.
Shares of the semiconductor giant have fallen 6.7% in the last two days, erasing over $220 billion (R3.9 trillion) in market capitalization and dragging the company from its place as the world’s top stock. Nvidia’s market cap was about $3.1 trillion on Friday, lower than Apple at $3.2 trillion and Microsoft at $3.3 trillion.
It was a swift reversal from earlier in the week, when Nvidia rallied to overtake its megacap peers and claim the pole position.
Traders said there weren’t any fundamental reasons behind the two-day selloff at the end of the week, but it does underscore the breakneck pace at which the stock had climbed — almost 200% in the past year alone — and how that ascent now makes it vulnerable to sudden retreats like this one.
"It’s just the usual fluctuations in the stock market which, with such large companies, can wipe or add hundreds of millions or even billions of dollars to their market value," said Russ Mould, investment director at AJ Bell. "Nothing has gone wrong at Nvidia."
Some whipsawing in the short-term was expected by some. In a June 19 note, analysts led by Vivek Arya at Bank of America said that Nvidia’s "steep climb makes it vulnerable to profit taking, but we argue any volatility likely to be short-lived." The group reiterated its buy rating, $150 price target and top pick status on the shares.