Why the INVISTA Stock Sell-Off Matters and What People Are Saying About It

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Something strange happened in the stock market this week-except for the unexpected plunge in the Consumer Price Index (CPI) report.

Shares of market darling Nvidia (NVDA) have fallen into correction territory, i.e., down 10% from recent highs.

The stock fell to a low of around $830 in mid-pan on Tuesday, down 12.61 TP3T from its March 25 high, and has since recovered slightly to $900, but is still down 51 TP3T from its high.

"This is a breather for Nvidia as more and more investors begin to focus on the second and third derivatives of AI across the semiconductor and software ecosystem," Wedbush technology analyst Dan Ives told me." We think it's a period of digestion for Nvidia, that's all."

Maybe facts will prove this to be true. Who knows?

Bank of America analyst Vivek Arya notes that Nvidia's volatility is nothing new - the current sell-off marks the ninth time the stock has fallen 10% or more since ChatGPT launched in late 2022.

"There are a number of market factors," says Arya, "such as the recent rise in inflation, volatility (VIX), weakness in AI stocks, cyclical sector rotation, and the possibility of some tinkering ahead of the upcoming earnings season." In terms of fundamentals, we are also hearing investor concerns about increased competition and shorter lead times for Nvidia's GPU gas pedals (suggesting a slowdown in demand) (which is to be expected, as far as possible, as demand for the new Blackwell grows)."

I happen to think that Nvidia's stock sell-off is a short-term negative for Big Pan and should be given more respect. Aria mentions this in his post, but it's worth emphasizing further.

This is a stock that was really loved by Wall Street and the mainstream market - and is losing ground for really fundamental reasons, such as the explosive growth of artificial intelligence driving demand for super chips. It's one of the clearest signs yet that investors think the stock market has come on too strong, too fast this year against a backdrop of persistently high interest rates.

In addition, the price action suggests that investors who were actively looking for new reasons to buy stocks at peak valuations are missing out. Now, they may simply be waiting to buy a top stock like Nvidia at a cheaper price.

This wait-and-see attitude is exactly what professionals have been doing with Nvidia and other highly valued but well-reasoned stocks.

It's not like we haven't seen Nvidia's stock lead the way down the Big Rock before, as it happened last summer!

Evercore ISI strategist Julian Emanuel correctly points out that from July 2023 through October 2023, Nvidia's stock price did almost nothing (chart below). It ended up being a catalyst for the S&P 500 to move lower.

Bottom line: For Big Pan to regain its mojo, so must its favorite stocks.

Brian Sozzi He is the Executive Editor of Yahoo! Please. On Twitter/X @BrianSozzi respond in singing LinkedInfirst (of multiple parts) Concerns SozziWhat are the proposals for the transaction, the merger, the radical situation or other aspects? Suggestions for trades, mergers, radical situations or other parties? Please send an e-mail to [email protected].

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