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Nvidia stock correction: Microsoft CEO hints at waning chip supply crunch

Dec 17, 2024 - markets.businessinsider.com
Nvidia's stock has experienced a 17% decline from its record high in November, nearing bear market territory. This drop has been exacerbated by comments from Microsoft CEO Satya Nadella, suggesting that the AI chip demand frenzy may be easing as supply constraints lessen. Nadella's remarks have raised concerns about Nvidia's growth prospects, as Microsoft is a significant customer, contributing an estimated 20% of Nvidia's revenue. Despite this, some analysts, like Dan Ives from Wedbush, view the decline as a temporary dip, emphasizing Nvidia's strong future prospects in AI.

Additional factors contributing to Nvidia's stock pressure include comments from AI industry leaders like Alphabet CEO Sundar Pichai and OpenAI cofounder Ilya Sutskever, who have highlighted potential challenges in AI development. Furthermore, Broadcom's strong earnings report and its booming AI business may be prompting investors to rotate out of Nvidia and into other AI stocks. Despite these challenges, Ives suggests that Nvidia's current decline presents a buying opportunity, as the company remains a key player in the AI revolution.

Key takeaways:

  • Nvidia's stock has dropped 17% from its record high in November, nearing bear market territory, partly due to comments from Microsoft's CEO about easing AI chip demand.
  • Microsoft, Nvidia's largest customer, indicated that it is no longer supply-constrained for chips, suggesting a shift in the supply-demand dynamic for Nvidia's AI products.
  • Comments from industry leaders like Sundar Pichai and Ilya Sutskever suggest potential challenges in AI development, which may be impacting Nvidia's stock.
  • Despite the decline, analysts like Dan Ives view this as a temporary dip and a buying opportunity, emphasizing Nvidia's strong future prospects in AI.
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