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Nvidia Nears Apple Market Cap: Where Next for NVDA?

By:Thomas Westwater

Nvidia drops on profit taking

  • Nvidia drops over 5% in biggest daily loss since May 2023.
  • Chip-sector tailwinds remain in place, offering potential buying opportunities.
  • High implied volatility offers options traders’ several ways to play the long side.

Nvidia (NVDA) was down over 5% in morning Wall Street trading, putting the high-flying stock on track to break a six-day win streak that has lifted it to fresh record highs.

An early-morning bounce in the broader equity market following the jobs report failed to prop up the stock. The artificial intelligence boom remains a potent tailwind for the stock, and investment in the sector will likely remain robust through the next several years as companies ramp up efforts to grab a piece of the pie.

Since its earnings announcement in February, Nvidia is up over 25%.

On Thursday, Broadcom (AVGO) said that it sees $10 billion in AI-related revenue for 2024. However, AVGO sold off on Friday, in line with the broader sector. The VanEck Semiconductor ETF (SMH) was down 4.3 points in morning trading as traders took profits on a solid week ahead of the weekend.

Market cap approaches Apple, where next?

Nvidia’s market capitalization has added over $1 trillion since the start of the year to take it to a total capitalization of over $2 trillion. That puts it close to Apple (AAPL), which boasts a market cap of $2.6 trillion. Apple stock has fallen recently, with slowing iPhone sales dragging on the company’s outlook.

With NVDA trading around 900 per share, many traders expect to see another split occur soon. The last stock split was in May 2021, when NVDA traded at $753.03. That four-for-one split took the price down to $187.37, far below where NVDA is trading today.

A stock split helps open access for more investors and should ultimately increase liquidity, although Nvidia isn’t having problems with that today.

Trading the Nvidia pullback

Nvidia’s 5% Friday pullback opens an opportunity for those who have been waiting to get long the stock. On a daily percentage basis, today is the biggest drop since May 2023.

For those wanting to take advantage of the relatively high implied volatility, evidenced by an implied volatility rank (IVR) of 93.5, selling a put spread offers a defined risk neutral to bullish play to sell some of that volatility.


Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater

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