Following the emergence of a competitor in the artificial intelligence (AI) chip sector and the activation of an official cautionary signal, NVIDIA’s impressive winning streak came to a halt.
The stock of the standout performer in this year’s AI-driven surge dipped by 1.6 percent on Wednesday, marking the end of a 10-day upward trend that equaled the previous pinnacle for the Santa Clara, California-headquartered company.
Based on data from Bloomberg gathered during this period of growth, the shares surged by 22% amounting to approximately US$220 billion in market value. The stock’s relative power index, a gauge of bullish and bearish price momentum ranging from 0 to 100, climbed above 70 as a consequence.
As the streak of victories extended for an unprecedented duration, NVIDIA’s stock ascended to an all-time high.
With the surge in purchasing activity reaching overwhelming levels, such an elevated RSI reading is commonly interpreted as a contrarian indicator signaling an imminent downturn. On Tuesday, the investment entered the so-called overbought territory for the first time since July.
On Wednesday, Microsoft, a key player in the AI hardware market, introduced its Maia 100 device, further unsettling NVIDIA investors. The software giant’s stock closed the session with a 0.2 percent decline.
Prior to the decline witnessed on Wednesday, NVIDIA shares had been riding high on the upswing of tech stocks amidst diminishing inflation concerns and the belief that Federal Reserve interest rates had peaked. The company also received an additional boost when it revealed an update to its AI chips on Monday.
Industry analysts suggest that NVIDIA accelerated the release of its innovative product to stay ahead of potential competitors in the lucrative and high-demand AI market. Microsoft’s announcement serves as a clear indication that the competition is intensifying.
NVIDIA is enhancing its flagship device to accommodate larger AI systems.
Investors are eagerly anticipating NVIDIA’s earnings report scheduled for November 21. Despite its significant contribution to driving the gains of the NASDAQ 100 this year, not all outlooks are optimistic.
As indicated in a regulatory filing on Tuesday, Michael Burry’s investment firm was taking positions against silicon stocks associated with NVIDIA. Meanwhile, the Duquesne Family Office of billionaire investor Stanley Druckenmiller trimmed its NVIDIA holdings in the previous quarter.
