New Delhi

Shares of Nvidia jumped 5 per cent on Tuesday after a 3-day slump that wiped off $430 billion from its market valuation. The tumble saw them lose around 13 per cent since the July 18 high. The drop followed a rally that accelerated after a 10-for-1 stock split. The drop also prompted speculations about a potential 'bubble' that could burst sooner or later.

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Nvidia's shares, which last week momentarily overtook Apple as the most valuable business in the world, are up 152 per cent this year and made up about 30 per cent of the S&P 500's year-to-date return. This year, the index is up 14.6 per cent.

Though the recent decline in the share price of the company seems to have made traders more cautious, there was clear bullishness surrounding Nvidia in the options market.

Surging demand for AI technology has significantly benefited Nvidia. The company holds an almost 80 per cent share of the AI chip market, particularly in data centres. Their H100 accelerators facilitate complex AI computations, resulting in a revenue increase exceeding 125 per cent year-over-year. This trend continued last quarter, with Nvidia's data centre business experiencing a 427 per cent growth, generating $22.6 billion.

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Analysts like Daniel Ives of Wedbush Securities estimate that Nvidia, Apple, and Microsoft are in a fierce competition to be the first companies in the technology sector to reach a $4 trillion market cap. With AI skills, each is delving deeply into its competitive advantages in an effort to win over investors.