Nvidia Stock Slips Again. What’s Behind the Fall.

Nvidia CEO Jensen Huang has built the company into the dominant provider of chips for artificial intelligence. (I-HWA CHENG/AFP via Getty Images)

Nvidia stock dropped again on Wednesday as a broad tech selloff took hold before the company reports its earnings next week.

Nvidia shares were down 0.1% at $175.40 at the close.

The stock fell 3.5% on Tuesday, its biggest drop in months, amid a broader selloff in highly valued technology companies. Nvidia shares are headed for their first two-week losing streak since April.

Among other chip makers, Advanced Micro Devices was down 0.8% and Broadcom was off 1.3%.

While there was no obvious trigger for the fall, technology investors might have been spooked by OpenAI CEO Sam Altman warning of a bubble in artificial intelligence. At the same time, a Massachusetts Institute of Technology report said the vast majority of companies investing in generative AI have yet to see returns.

The next major catalyst for Nvidia comes on Aug. 27 when it reports earnings. Analysts are generally positive on the company’s likely outlook, although there is some uncertainty over whether its financial forecasts will include sales in China, which require license approvals and for the company to give the U.S. government 15% of the revenue generated.

“Expect another strong earnings from Nvidia with another high expectations. The question currently is on the Blackwell Ramp and any update on H20 reramp given the export license restrictions have been lifted,” said Ryuta Makino, research analyst at Gabelli Funds. “There may be questions on the 15% rev share with the government and how that may impact ultimate end-demand.”

Regardless of the latest moves in the stock, Wall Street is raising its target for the price. KeyBanc analyst John Vinh lifted his target price to $215 from $190 with an Overweight rating. TD Cowen analyst Joshua Buchalter raised his call to $235 from $175 and kept a Buy rating on the stock.

“We note Nvidia is trading at a discount to Broadcom despite what we see as a cleaner setup, and we believe [it] remains the best and cleanest way to play AI,” wrote Buchalter in a research note. “We see Nvidia delivering solid results, likely meeting investor expectations with bias to the upside.”

Not that it’s doing much good today.

Write to Adam Clark at adam.clark@barrons.com