The surge in synthetic intelligence chipmakers and other AI-related stocks may be causing concern among investors. On Tuesday, stocks like Microsoft (MSFT) and Arm Holdings (ARM) experienced a downturn.
Arm Holdings, after a significant increase of 104% over the past four trading sessions, saw a retreat in its stock value, dropping more than 14% to 127.03 in the property sector midday trading today.
The chip designer provided a pessimistic outlook for the upcoming week, exceeding the expectations of Wall Street for its fiscal third quarter.
Reports from The Wall Street Journal indicated that initial users of the bank’s AI assistant were questioning its value, leading to a decline in Microsoft’s shares.
Evaluation of Microsoft Copilot’s Pricing
Microsoft’s Navigator program, designed for productivity applications, has proven beneficial in certain scenarios like transcribing and summarizing meetings, as per feedback from corporate users to the Journal. However, Copilot may not be as effective for applications such as PowerPoint and Excel.
Microsoft mentioned that some features are still in a beta phase, as conveyed to the Journal. The company charges $30 per user per month for Copilot services.
During a Super Bowl commercial on Sunday, Microsoft showcased its Navigator products.
Microsoft’s stock declined by 1.6% to 408.82 during midday trading. The MSFT stock had reached a peak of 420.82 on Friday.
Analysis of Nvidia, AMD, and Analyst Reports
Several chipmakers linked to the AI sector witnessed fluctuations in the stock market on Tuesday. Companies like Advanced Micro Devices (AMD) and Nvidia (NVDA) were among those affected.
AMD’s stock dropped by 4.4% after the market opened but rebounded slightly to 171.98 in recent trading. On January 25, AMD hit an all-time high of 184.92.
Nvidia’s stock experienced a 3.6% decline at the beginning of the day but recovered swiftly, reaching 729.48 in late-night trading, up by 1%. NVDA stock had achieved a record high of 746.11 on Monday.
Positive reviews from Wall Street analysts contributed to the rise in AMD and Nvidia stocks.
UBS analyst Timothy Arcuri raised his price target from 580 to 850 while reiterating his buy recommendation on Nvidia stock.
Mizuho analyst Vijay Rakesh also increased his price targets, raising Nvidia’s from 625 to 825 and AMD’s from 175 to 200, maintaining a buy rating for both.
AI Companies in Focus
However, some AI-related companies witnessed declines on Tuesday.
Broadcom (AVGO) stock fell by 1% to 1,251.81 in midday trading, while Marvell Technology (MRVL) stock dropped by 1.6% to 69.31.
For more insights on consumer systems, software, and silicon companies, follow Patrick Seitz on X (formerly Twitter) at @IBD_PSeitz.
