The Warning Signals
Nvidia Corp. NVDA witnessed a 5.55% decline in shares on Friday, halting a six-session winning streak. A sense of caution looms as a portfolio manager raised concerns about further downtrends.
Market Reflection
What Happened: Jeff Kilburg, the founder of boutique investment management firm KKM Financial, highlighted the potential for a dramatic market adjustment come Monday morning. Remarking on the colossal $225 billion market cap loss from its intraday peak, Kilburg emphasized the uncertain road ahead for Nvidia, which closed at $875.28, incurring additional losses surpassing $24 after hours.
Kilburg alluded to a notable technical downturn, indicating a substantial gap down to $625 where the 50-day moving average lies—a threshold not tested in quite some time. This decline references a gap created by the stock’s surge in late February post the fourth-quarter results release.
Examining Friday’s somber stock movement, Kilburg expressed a sentiment of deflation, suggesting the euphoria surrounding Nvidia may have dissipated. Just over a year ago, Nvidia held a $350 billion market cap; presently, it has ballooned to $2.2 trillion.
Behind the Scenes
In a moment of reflection, Kilburg mused about Nvidia’s rapid ascent, recalling a time not long ago when the stock hovered around $550 to $600. Against the odds, it soared to $974, prompting disbelief in the market’s unyielding bullish trajectory.
Despite the apparent permanence of Nvidia’s upward trajectory, Kilburg’s firm made wise investment decisions, opting for puts—a move that now appears prescient given the recent market developments.
Market Outlook: A Seesaw Ride
Why It’s Important: While Kilburg’s tone reflects near-term skepticism, most tech analysts maintain an optimistic outlook on Nvidia’s fundamental strength, particularly in light of the technology giant’s prominence in the artificial intelligence sector. Deepwater Asset Management’s Gene Munster foresees the AI boom lasting another three to five years before reaching its zenith.
Wedbush’s Dan Ives views the current AI fervor as merely the outset of a larger revolution, distinct from the dot-com bubble crash of 1999. Nvidia’s entrenched position in the AI accelerator market underscores its pivotal role as a primary beneficiary of the ongoing AI wave in the foreseeable future.