Chip major Nvidia’s (NASDAQ:NVDA) shares were declining on Tuesday following six consecutive sessions of gains. Nvidia lost 2.13% to trade at $154.63 during afternoon trading.
The stock gained over 9% during the preceding six-session rally outpacing the S&P500’s nearly 3% rise. On a year-to-date basis, it has advanced more than 16%.
Within the past week, the stock saw the highest jump on June 25 when it closed 4.33% higher at $154.31 after U.S. lawmakers introduced the No Adversarial AI Act seeking to ban Chinese artificial intelligence models. Its stock price touched a record high of $154.97 during the trading hours.
The rally pushed the chipmaker’s market capitalization to around $3.76 trillion, where it surpassed Microsoft (MSFT) to become the world’s most valuable company.
The semiconductor titan’s current downturn is likely due to a mix of reason- while profit booking could be on of them, Seeking Alpha analysts have also turned cautious towards the stock.
Livy Investment Research said in an article earlier in the day that even as Nvidia continues to lead in capturing AI-driven growth, its current valuation already assumes a best-case scenario. The stock’s sharp rally reflects high expectations for perfect execution, despite growing risks. One key concern the analyst noted is the upcoming July 9 tariff decision, which, they said, could negatively affect Nvidia’s earnings outlook.
“Coupled with broader macro uncertainty, tightening export curbs, and intensifying competition, Nvidia’s growth outlook faces escalating challenges that the stock’s current valuation isn’t being honestly reflective of,” it added.
Meanwhile, Envision Research has also downgraded its rating on the stock to Buy from an previous rating of Strong Buy.
“Besides valuation risks and some generic risks (competition, economic cycle, etc.), another risk more unique to NVDA is its exposure to its China market,” it noted.
As per Seeking Alpha’s quant rating, the stock has been rated Hold with a score of 3.41 out of 5. It has been graded an A+ for profitability and an F for valuation. Seeking Alpha analysts have issued a Buy call for the stock while Wall Street analysts have a Strong Buy rating.