Nvidia Isn’t Beyond the Basic Principles of Market Dynamics

Economic cycles have been part of the human experience for thousands of years, we shouldn't imagine these cycles will suddenly end

Nvidia Isn’t Beyond the Basic Principles of Market Dynamics

Another interesting week in the markets.  Nvidia finally had a relatively minor sell-off, dropping 15.7% from its all-time high set on June 17.  Let’s put things in perspective for this company that used to specialize in graphics and gaming. In March of 2020, the stock was trading at $4.5 per share (on a post-split basis).  On June 17 of 2024, the stock was trading at $140.70.  In a little more than four years the share price increased more than 30-fold!!  

Nvidia was an early developer of GPU technology, and they were able to turn their specialized chips into a successful consumer-oriented product. Its core product, GPUs, was sold as add-ons for consumer computers.  Over time, the company has pivoted toward the design and building of specialized chips for advanced computing that can process enormous amounts of data very quickly for what is labeled “artificial intelligence.” This generative AI has facilitated the development of Nvidia into a technology leader with a market capitalization today of $3.1 trillion dollars.

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