Nvidia is in correction territory, down 10% from its record close

Nvidia Stocks fell on Monday, putting the darling AI chip officially in correction territory even as the rest of the Nasdaq Composite rose to a record high.

Actual chipmaking and AI trading is up 166% this year amid continued excitement over the buzzing technology trend. However, stocks have faced a sluggish stretch recently.

The stock fell 4.5% in December and is officially in correction territory, down about 11% from the closing high of $148.88 it reached last month. The definition of what includes a market correction can vary. Many generally consider it a decline of 10% or more from the all-time closing high.

The stock closed down 1.7%.

“You need Nvidia, and you need their chips for infrastructure,” said Keith Lerner, co-chief investment officer at Truist. “But I think what the market is also saying is that there are other beneficiaries beyond that. There is a rotation within the Seven Wonders, which we have seen several times this year already.”

Nvidia’s recent weak performance could signal some profit-taking on Wall Street after another busy year. The manufacturer of GPUs that support large language models has benefited as demand for data centers has ballooned since the launch of ChatGPT in late 2022.

But there are some reasons to worry for the market leader and major player among the three major averages. The market continues to reach new highs with Nvidia underperforming. This may be a warning sign if the pattern continues Roth MKM noted The $125 to $130 level represents a major test for the stock and the market in general.

While Nvidia has struggled, other chipmaking stocks have performed well Broadcom Energy reached new highs on Monday. The stock rose about 11% during Monday’s session. Building on a 24% rise from Friday, pushing the stock above the $1 trillion market cap after a strong earnings report.

The Nasdaq Composite Index reached… Register to trade on Monday Without Nvidia’s help.

“Broadcom’s comments last week likely prompted investors to start looking for faster growth there,” said Kim Forrest, chief investment officer at Bokeh Capital Partners. “Momentum has been driving this stock. I don’t think momentum is going to kill it quite yet, but momentum is doing what momentum does, which is it’s going high.”

Shares of other semiconductor companies also rose on Monday Micron technology It jumped about 6% ahead of its quarterly results this week. Marvell technology and L Research It rose 3% and 2%, respectively On semiconductors and Taiwan Semiconductor Co., Ltd He added about 1% to each.