The stock of chipmaker Nvidia (NVDA) has fallen into correction territory, defined as a decline of 10% or more from recent highs.
In Nvidia’s case, the stock is down 11% from an all-time high closing price of $148.88 U.S. reached on Nov. 7 of this year.
Overall, the company has had a great year in 2024, with its share price rising more than 170%. The stock is one of the top performing securities in the benchmark S&P 500 index.
However, Nvidia’s stock is now declining at a time when the other Magnificent 7 stocks are rallying to close out the year, with other mega-cap tech stock such as Alphabet (GOOG/GOOGL) hitting all-time highs.
Nvidia has also lost its status as the world’s most valuable publicly traded company, falling to third place behind Apple (AAPL) and Microsoft (MSFT).
Analysts say the decline is due to challenges facing current and future sales of Nvidia’s artificial intelligence (A.I.) microchips and processors.
Nvidia’s stock has been sliding lower as the market waits for evidence of how quickly the company can ramp up sales of its newest Blackwell A.I. chips.
The company is also getting caught in some geopolitical headwinds, notably between the U.S. and China.
America is preparing rules that would limit the sale of advanced A.I. chips in Southeast Asia and the Middle East to restrict China’s access to computing power hosted in other countries.
At the same time, Nvidia is grappling with slowing growth.
The consensus expectation among analysts is for Nvidia’s revenue to increase 55% in 2025. While impressive, that’s a slowdown from year-over-year growth of more than 200% in previous quarters.
Despite the current pullback, many analysts are encouraging investors to buy-the-dip in Nvidia’s stock.
Bank of America Securities (BAC) just reiterated Nvidia as a “Top Pick” in the semiconductor space for 2025.
The stock of Nvidia is currently trading at $132 U.S. per share, having gained 174% on the year.
