NVIDIA Corporation (NASDAQ: NVDA) stock plummeted over 5% on Friday, and a portfolio manager cautioned about further downside.
Jeff Kilburg, the founder of boutique investment management firm KKM Financial, painted a sobering picture of Nvidia’s stock performance in a recent CNBC interview, calling Monday morning’s prospects potentially jarring for investors.
Kilburg highlighted Nvidia’s staggering $225 billion loss in market capitalization from its peak on Friday, emphasizing the stock’s additional drop of over $24 in after-hours trading, closing at $875.28.
Kilburg said,
“If you look … technically, there’s a gap all the way down to 625 where the 50-day moving average is where it hasn’t been in a long time.”
The gap-down the portfolio manager referred to is backfilling the gap-up the stock made in late February following the release of the company’s fourth-quarter results.
Analyzing the stock movement on Friday, Kilburg remarked,
“It feels like the fever broke.”
He underscored Nvidia’s remarkable journey from a market cap of about $350 billion around 14 months ago to its current valuation of $2.2 trillion.
Kilburg said,
“It seems like just two months ago when it was trading $550 to $600, it could not go any higher, and, sure enough, today, it went up to $974.”
He also said his firm was buying puts, which may have seemed illogical for a stock that appeared it was never going down.
He said,
“Luckily, that chain worked out very well today.”
Tech Analysts are Bullish on NVDA
While Kilburg expresses pessimism regarding Nvidia’s short-term prospects, most tech analysts remain bullish on the company’s fundamentals, buoyed by their optimistic outlook on artificial intelligence. Gene Munster from Deepwater Asset Management anticipates the AI boom to persist for another three to five years before reaching a climax.
According to Dan Ives of Wedbush, the AI revolution is just beginning, contrasting it with the frenzy seen during the dot-com bubble of 1999-2000. He highlights that during that time, the tech landscape exhibited excessively high valuations, limited monetization and infrastructure, precarious balance sheets, speculative business models, and a turbulent macroeconomic environment.
NVIDIA (NASDAQ: NVDA) Stock Price Action
NVDA stock plunged 5.55% to close at $875.28 on Friday. The traders had exchanged hands with 112,126,179 (112.12 million) shares compared to the average daily trading volume of 47.69 million.
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