Nvidia's Stock Posts Biggest Weekly Gain in 15 Months, Ending Long Losing Streak
Nvidia Corp. has experienced a remarkable turnaround in its stock performance, making a strong comeback after a challenging period that saw its shares fall into a bear market. This resurgence represents Nvidia’s best weekly performance in over a year, signaling renewed investor confidence in the semiconductor giant and its pivotal role in artificial intelligence (AI).
Leading up to this turnaround, Nvidia’s stock had faced significant headwinds. By early August, shares had dropped by 19% due to a prolonged four-week losing streak, the longest since the five-week period ending in October 2022. This decline was exacerbated by concerns about a potential rotation away from large technology stocks and fears that delays in Nvidia’s new Blackwell chip release could signal a broader cooling of the AI boom. On August 7, Nvidia’s stock closed at $98.91, a notable 27% below its record high close of $135.58 set on June 18. This sharp drop placed Nvidia’s shares firmly in bear market territory, defined by a decline of at least 20% from recent peaks.
The shift in sentiment came suddenly. As the week began, Nvidia’s stock rebounded with a 4.1% rally, driven by a bullish call from BofA Securities, which identified Nvidia as its top “rebound” pick. This positive momentum continued, culminating in a 1.7% gain on Friday and marking the stock’s fifth consecutive day of increases. Overall, Nvidia’s shares surged 18.9% over the week, representing its best weekly performance since the 24.6% spike in late May 2023.
This recovery has been buoyed by reassurances from industry analysts. Wedbush Securities’ tech analysts have sought to counter concerns about the sustainability of the AI spending boom. They argue that current conditions are more analogous to the early days of the internet in the mid-1990s rather than the overinflated tech bubble of 1999. The analysts contend that while it may take time for corporate investments in AI to yield significant revenue growth and improved margins, the overall trend remains positive. They anticipate that Nvidia’s fiscal second-quarter results, scheduled for release on August 28, will showcase a “massive demand trajectory” for AI chips extending through 2025. Nvidia’s CEO, Jensen Huang, is expected to emphasize this ongoing demand in his remarks.
Despite the recent volatility, Nvidia’s stock has posted an impressive 151.6% increase year-to-date, making it the top performer in the S&P 500 index for 2024. In a close second is Super Micro Computer Inc., another company heavily involved in AI, which has seen its stock rise by 121.2% this year.
This turnaround underscores the resilience of Nvidia’s stock and highlights the enduring optimism surrounding AI technologies. Despite recent market fluctuations and setbacks, the company’s strong performance and the positive outlook for AI investments suggest that the sector’s growth potential remains robust.
