Investors are keeping a close eye on Nvidia as shares of the newly minted $1 trillion company dipped by 3.7% to $406.32. While the overall market slump contributed to the decline, experts suggest that Tesla is also to blame.
At a low of $401, Nvidia’s market capitalization dips below the prestigious $1 trillion level that only a few companies like Apple, Microsoft, Alphabet, Amazon.com, Meta Platforms, and Tesla have accomplished. The current market cap is based on just under 2.5 billion shares outstanding, excluding any adjustments for stock options.
There have been no upgrades or downgrades for Nvidia or other chip makers like Advanced Micro Devices and Taiwan Semiconductor Manufacturing. Intel shares have edged up by 0.8% as well, but no upgrades or downgrades were noted for those stocks.
On the other hand, in just four days, Tesla stock has already suffered four downgrades, with analyst Mark Delaney of Goldman Sachs downgrading it from Buy to Hold while increasing his price target to $248 from $185 a share.
Tesla and Nvidia: Two AI Stocks
Tesla and Nvidia are both categorized as AI stocks. While the former has experienced a drop of $11.32 or 4.4% in its share prices due to a host of downgrades, Nvidia has witnessed an increase of about 33% in shares since it reported remarkable first-quarter earnings on May 24th.
Nvidia maintains its position as the biggest AI play in the market, given that its chips power the computers required to initiate AI processes. On the other hand, Tesla has its own unique way of contributing to the AI industry. Tesla’s driver assistance software is trained by artificial intelligence, enabling the company to manufacture self-driving cars that operate at faster speeds.
Both companies will not always move together, but they seem interdependent at present, experiencing similar effects due to various market forces. This spell is anticipated to continue until Tesla’s second-quarter deliveries are made public on July 2. Investors seek to see a remarkable increase from the first quarter’s 423,000 deliveries, expecting a range of 440,000 to 445,000 deliveries.
The recent rise in Tesla’s share prices has heightened investors’ anticipation of a blowout number in its second-quarter deliveries. If that hope materializes, Tesla’s stocks will surely rise, affirming its status as a significant contributor to the AI industry.
The Two AI Giants
Nvidia and Tesla remain two of the most important contributors to the AI market. While Nvidia has remained consistent in powering computer systems that make AI work, Tesla has taken a different route with its driver assistance software trained by artificial intelligence.
Investors have observed that whenever one of these companies experiences significant treatment in the stock market, the other reacts in a similar fashion. Recently, Tesla’s downgrade led to an $11.32, or 4.4%, dip in share prices while Nvidia’s blowout first-quarter earnings caused a 33% increase in shares.
The next critical event that could break this trend is the release of Tesla’s second-quarter deliveries on July 2. In anticipation of a remarkable increase from the first quarter’s 423,000 deliveries, investors have their fingers crossed for a blowout number, given the recent surge in stock prices.
Stay tuned for more updates and market trends related to AI’s two giants in the coming weeks.