Nvidia Corp. NVDA encountered a 5.55% decline in shares on Friday, thereby signaling the end of a six-day winning spree. The ominous cloud looming over the stock market was echoed by a portfolio manager who forewarned of further cascades.
Predictions Unraveled: During a conversation with CNBC, Jeff Kilburg, the brains behind the boutique investment firm KKM Financial, issued a somber statement, prophesying a “rude awakening” on Monday for Nvidia. He cast light on the substantial $225 billion market cap hemorrhage that Nvidia suffered on Friday. Following a closing descent to $875.28, the stock bled an additional $24+ in post-trading hours.
Pointing to a lower trading horizon at $625 where the 50-day moving average resides, Kilburg spotlighted the emerging technical chasm that Nvidia must navigate. The portfolio manager alluded to a backfill of the precipitous climb the stock experienced in late February post the company’s fourth-quarter earnings unveiling.
Source: Yahoo Finance
Reflecting on the day’s tumult, Kilburg put forth, “It feels like the fever broke.” A little over a year ago, the stock flaunted a market cap of approximately $350 billion, which, since then, burgeoned to $2.2 trillion, he elaborated.
“It appears that just a couple of months back, hovering around $550 to $600, the stock seemed indomitable; yet, today it swaggered up to $974,” Kilburg remarked.
In a peculiar twist, Kilburg divulged that his firm had taken up puts, a move seemingly absurd for a stock that had ostensibly adopted an ascendant trajectory.
“Fortunately, that strategy paid off handsomely today,” he chuckled.
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Crucial Implications: Kilburg’s bearish outlook notwithstanding, a majority of tech prognosticators remain steadfastly bullish on Nvidia’s underlying strengths, fueled by their sanguine stance on artificial intelligence. Predicting a sustained AI upsurge, Deepwater Asset Management’s Gene Munster estimated the longevity of the AI boom at three to five more years before an eventual rupture.
Offering an interpretative lens, Wedbush’s Dan Ives dissected the burgeoning AI trend as still at the dawn of its evolution. He hearkened back to the tech upheaval of 1999 and 2000, delineating stark contrasts, where bloated valuations, lack of monetization, flimsy financial foundations, tepid business models, and macroeconomic reverberations underscored the tech sector.
With Nvidia reigning supreme in the AI accelerator domain, it appears poised to reap disproportionate benefits from the ongoing AI revolution in the immediate to near-term.
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