Investors showed signs of altitude sickness on Thursday as they sold off highflying Nvidia stock and other semiconductor stocks with exposure to the artificial intelligence trend.
Data center AI chip leader Nvidia saw its shares hit a record high 140.76 on Thursday morning before retreating. On the stock market today, Nvidia stock dropped 3.5% to close at 130.78.
Other semiconductor stocks with exposure to the build-out of AI data centers fell in sympathy. They included Broadcom, Micron Technology and Taiwan Semiconductor Manufacturing.
Broadcom stock sank 3.8% to close at 1,734.56 on Thursday after notching a record high of 1,851.62 on Tuesday. The stock market was closed on Wednesday for the Juneteenth holiday.
Memory-chip maker Micron saw its shares fall 6% to 144.19 after reaching an all-time high at 157.54 on Tuesday.
Cutting-edge chip foundry Taiwan Semiconductor watched its U.S. shares decline 2.4% to 175.38 on Thursday. Taiwan Semi stock hit a record high 184.86 on Tuesday.
Nvidia Stock, Others Reach Profit-Taking Zone
Nvidia, Broadcom, Micron and Taiwan Semi all had reached the 20%-to-25% profit-taking zone following their recent breakouts, according to IBD MarketSurge charts.
In Nvidia's case, the stock had climbed 44.5% from its breakout on May 23 before reversing Thursday.
In a client note early Thursday, Mizuho Securities trading desk analyst Jordan Klein said investors have aired concerns that valuations of AI semiconductor stocks have gotten frothy. They have expressed worries to him "that the rally is not sustainable and will end badly in tears at some point."
Nvidia Stock Could Be Taking A Breather
Meanwhile, BofA Securities analyst Vivek Arya on Wednesday reiterated his buy rating on Nvidia stock with a price target of 150.
The "stock's steep climb makes it vulnerable to profit-taking, but we argue any volatility (is) likely to be short-lived," Arya said in a client note. He says the tech industry is only in the second year of a three-to-five year deployment cycle of generative AI.
Elsewhere among semiconductor stocks, companies putting AI into network-edge devices like PCs and smartphones also showed weakness on Thursday. They included Arm Holdings and Qualcomm.
Chip designer Arm saw its shares fall 7.7% to 160.77 on Thursday. Arm stock notched an all-time high of 177.31 on Tuesday.
Shares of mobile-device-chip maker Qualcomm dropped 5.1% to 215.47 on Thursday. Qualcomm stock hit a record high of 230.63 on Tuesday.
The IBD Tech Leaders list includes Nvidia stock as well as Arm, Broadcom, Qualcomm and Taiwan Semiconductor.
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