Nvidia Enters Correction Territory

When a stock goes through a “correction,” it is broadly defined as the point when a stock falls 10% or more from an all-time high. That’s what is happening to Nvidia, as the company’s share price slid further into correction territory on Tuesday, marking a 10% decline from last month’s all-time high of $148.88. 

The stock fell another 1.86% in premarket trading, signaling a reversal in momentum despite being up more than 160% this year. By contrast, rival chipmaker Broadcom’s shares, which initially rose before dipping slightly, have surged 40% in the past five days and are up over 120% year-to-date. 

Broadcom’s rally comes on the heels of impressive fourth-quarter earnings that exceeded market expectations. The company also delivered a stronger-than-anticipated revenue outlook for the current quarter, prompting Wall Street analysts to revise price targets upward. 

Broadcom’s edge lies in its ability to develop custom AI chips for cloud giants investing heavily in AI infrastructure, known as “hyperscalers.” Meanwhile, Nvidia is still the dominant force in the AI landscape, with its GPUs powering some of the most advanced AI models. However, investor sentiment has cooled as the market recalibrates expectations, resulting in short-term corrections for the tech darling.  

What Does This Mean for Me?

The diverging fortunes of Nvidia and Broadcom reveal the nature of the competitive and rapidly evolving AI sector, where companies specializing in custom solutions are capturing investor attention. While Nvidia continues to deliver long-term growth, Broadcom’s recent performance highlights its emerging role in AI infrastructure. For investors, the battle between established players and agile innovators remains central as demand for AI hardware accelerates.