Nvidia
stock was rising Wednesday after falling the previous day, when the chip maker’s rally looked to be taking a pause amid worries about a market pullback.
Nvidia stock was up 2.1%, at $696.68, in recent trading. The
S&P 500 index
was up 0.9%.
Nvidia shares closed down 1.6%, at $682.23, on Tuesday. That put only a small dent in gains over the past 12 months, which have seen the stock more than triple over excitement about its leading place in providing chips for training artificial-intelligence systems.
Profit-taking looked to be the most likely cause of the dip, with commentators becoming more concerned about the narrowness of the stock market’s rally, which was built on gains by Big Tech stocks.
“Breadth matters and the internals of the main U.S. indexes are poor and getting worse. This elevates susceptibility and likely pronounced volatility,” wrote Stifel analyst Richard Kneller in a research note.
Nvidia stock has more than tripled in value over the past 12 months and currently trades at a price/earnings multiple of around 50 times for its 2024 fiscal year ended January, according to FactSet. Nvidia will report earnings on Feb. 21.
Investors might also be watching news from China, where the biggest domestic chip maker
Semiconductor Manufacturing International
posted a 55% fall in quarterly profit on Wednesday. SMIC said it was continuing to invest heavily in production as it aims to produce the latest smartphone and AI chips for Chinese tech company Huawei. However, there are doubts over SMIC’s capacity to produce chips to rival Nvidia’s due to restrictions on its access to advanced chipmaking equipment.
“As SMIC makes more of these chips, it is either going to lose more money or it will have to charge Huawei more money for the working chips that it makes,” wrote independent analyst Richard Windsor, who publishes Radio Free Mobile.
SMIC shares closed down 8% in Hong Kong. In the U.S.,
Advanced Micro Devices
was up 2.2% in recent trading and
Intel
was up 0.7%.
Nvidia stock has risen 26% over the past month through Tuesday’s close. That compares with a 3.6% rise for the S&P 500 and a 4.3% rise for the
Nasdaq Composite.
Nvidia’s trading volume of 68.3 million shares on Tuesday was well above its 65-day average of 43.1 million.
Write to Adam Clark at adam.clark@barrons.com
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