Nvidia continued its slide into correction territory on Tuesday, closing down more than 1%. Broadcom, which initially saw gains during pre-market trading, also ended the day lower, reversing earlier momentum to close down 4%.
On Monday, Nvidia officially entered correction territory, a term used to describe a stock’s decline of 10% or more from its all-time high. The company reached its peak closing price of $148.88 last month. Meanwhile, Broadcom shares, despite their Tuesday dip, have been on an upward trajectory over the past week, diverging from Nvidia’s downward trend.
The contrasting performance comes as Broadcom benefits from strong market sentiment following its fiscal fourth-quarter earnings report last week. The company exceeded Wall Street’s expectations and provided a robust revenue outlook for the current quarter. Several analysts, including those at Goldman Sachs, raised their price targets for Broadcom’s stock, adding to its bullish momentum.
Year-to-date, both companies have seen remarkable stock gains. Nvidia’s shares have climbed more than 160%, fueled by the soaring demand for its graphics processing units (GPUs). These GPUs are pivotal for training large-scale artificial intelligence models, such as those developed by OpenAI. Broadcom, specializing in custom AI chips for hyperscalers—major cloud computing firms—has risen over 120% during the same period.
Broadcom CEO Hock Tan expressed optimism about the company’s AI prospects during its earnings call last week. He highlighted the demand for custom AI accelerators, stating, “Massive specific hyperscalers have begun their respective journeys to develop their own custom AI accelerators. We see an opportunity over the next three years in AI.”
Despite their recent divergences, both Nvidia and Broadcom remain key players in the rapidly expanding AI hardware sector.
Author’s Opinion.
The recent divergence between Nvidia and Broadcom highlights the nuanced dynamics of the AI hardware market. Nvidia’s reliance on GPU demand has driven monumental gains this year, but its correction signals that even leaders aren’t immune to shifts in investor sentiment. Broadcom, on the other hand, is capitalizing on the growing trend of custom AI chip development, positioning itself as a critical player for hyperscalers. These trends underscore the competitive and fast-evolving landscape, where adaptability and innovation will define long-term winners.
