Nvidia Bleeds Into ‘Warning’ Territory as Broadcom Steals AI Crown (For Now)...

Nvidia Bleeds Into ‘Warning’ Territory as Broadcom Steals AI Crown (For Now)...

What’s that sound? Oh, just Nvidia’s stock price taking a nosedive, and retail investors (presumably the entirety of Wall Street Bets) are punching swaths of air. In short, after a year of melting everyone’s mind with a 180+% ascent, the stock has officially entered correction territory—as shares fell -1.7% on Monday, marking an 11% drop from its peak last month. 

(Source: Giphy) 

Now sure, this 11% dip has everyone and their mother on the street screaming “correction” but in truth, it sounds scarier than it is. The company remains up a jaw-dropping 174% for the year, but Wall Street seems to be taking a moment to catch its breath after Nvidia’s blockbuster run. 

(Source: CNBC) 

But, but, but… what exactly is driving this pullback, you ask?  Profit-taking, plain and simple. See, investors are actually doing something smart for once and locking in gains after Nvidia’s meteoric rise. Meaning, the sky isn’t falling and the AI bubble isn’t popping—especially as Keith Lerner, co-CIO at Truist states, “You need Nvidia, and you need their chips for infrastructure.” However, he also pointed out that the market seems to be broadening its focus. Translation: Nvidia’s great, but it’s not the only game in town anymore.

Simply put, while Nvidia cools off, Broadcom is having its moment after the company put on an absolute earnings masterclass last week. The stock surged 11% Monday, capping off a 40% rally in just five days (all while hitting a $1 trillion market cap along the way). The momentum starter for Broadcom? Well, their sweet spot is geared towards custom AI chip hyperscalers–think the Amazons and Googles of the world. CEO Hock Tan noted during the earnings call that these companies are diving headfirst into developing their own AI accelerators, and Broadcom is cashing in on that trend. Wall Street noticed, with firms like Goldman Sachs hiking their price targets in response.

(Source: Yahoo Finance) 

Meanwhile, for the first time in what seems like… forever, the Nasdaq Composite hit a record high on Monday—without Nvidia’s help. That’s a subtle reminder that, while Nvidia’s been the star of the AI show, the market doesn’t solely rely on one player. Now going forward, the key question for Nvidia is whether it can hold the line at its $125–$130 support level, which analysts have flagged as critical. If it doesn’t, we could see more downside. 

But again, this ain’t a doomsday scenario here. Nvidia still remains the gold standard for training AI models, and its long-term prospects are still solid. As for Broadcom, sure it’s riding the wave, but the market is a bi-polar beast. Meaning, sustaining their current pace will only depend on whether the company can deliver it’s AI chip promises in the months ahead. 

(Source: Giphy) 

Now with that said, I don’t have any concerns that they won’t deliver, but still, the Street is nasty. And if one metric isn’t hit, well then all hell breaks loose, and the second winner suddenly becomes the first winner. Meaning, Nvidia is solid. Their financials are solid. Their AI demand is solid. And it’s only a matter of time before shares are back on top. 

(Source: Giphy) 

But for now, it’s clear shares are taking a breather, and Broadcom’s rise shows there’s plenty of room for competition in the AI race. What’s even more telling? Is that Wall Street’s insatiable appetite for all things AI isn’t slowing down anytime soon. So take advantage while you can.

In the meantime, filter all this through a brain-cell, friends and place your bets accordingly. As always, stay safe and stay frosty! Until next time…

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Stocks.News holds positions in Amazon and Google as mentioned in the article. 

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