Is Nvidia stock a buy or a sell? That’s a question that many investors are asking themselves as the stock recently broke below its 50-day moving average for the first time in months. The pullback in Nvidia’s stock is not an isolated event, as other AI stocks have also seen notable losses. Super Micro Computer, Palantir Technologies, C3.ai, Upstart Holdings, Broadcom, and Marvell Technology are just a few of the other AI plays that have experienced declines in recent days.
But why are these stocks retreating? It’s not entirely clear, but one possible explanation is that the AI-led market rally is struggling and some key companies have had disappointing results or guidance. Regardless of the reason, the decline in AI stocks is a cause for concern for the broader market rally.
Earnings reports from Walt Disney, Trade Desk, Illumina, Oddity Tech, Fluence Energy, and Wynn Resorts were released on Wednesday night. Disney’s stock turned higher after initially dipping on weak revenue and overall subscribers. Wynn Resorts also saw a modest increase in stock price. However, Trade Desk and Illumina were solid losers.
Looking ahead, the July CPI inflation report is set to be released on Thursday. Economists expect the CPI to climb 0.2% compared to the previous month, with the annual inflation rate expected to pick up to 3.3%. While this report isn’t expected to be a game-changer for the Federal Reserve’s rate hike outlook, it will still be watched closely by investors.
In terms of the stock market rally as a whole, the Dow Jones futures rose slightly after hours, along with S&P 500 futures and Nasdaq futures. However, the stock market rally lost ground on Wednesday, with the Nasdaq composite falling below its 50-day moving average for the first time since early 2023. The market rally has been under pressure in recent days, and any further losses could trigger a shift to a market correction.
So, what should investors do now? It’s a critical time for the stock market rally, and market breadth has weakened over the past several sessions. While AI stocks and other tech names are selling off, energy and some commodity plays are still doing well. Market conditions will be a big factor in Nvidia’s next move, and investors should be prepared to act quickly in either direction.
Analyst comment
The news can be evaluated as negative. The decline in AI stocks, including Nvidia, is causing concern for the broader market rally. The release of earnings reports and the upcoming inflation report will be closely watched by investors. The stock market rally has lost ground recently and further losses could lead to a market correction. Investors should closely monitor market conditions and be prepared to act quickly.