Nvidia stock price tumbled on Tuesday, hitting its lowest level since May 2024. Investors are waiting for major technology companies’ earnings data. Some speculate that AI hardware might become a serious competitor for the tech sector.

NVDA shaved off 7.04% today. Its shares closed lower by 7% at the end of the session, reaching $103.73. On the other hand, the tech-focused Nasdaq Composite Index (COMP) dropped by 1.3%.

In July 2024, Nvidia’s stock suffered significantly. Its shares plummeted by 16% last month, showing the worst performance since September 2022, when they declined by 20%.

While not so dire, 16% is still a substantial amount. So, what’s happening? And will the stock rebound soon?

Why Is Nvidia Stock Going Down?

Mizuho analyst Jordan Klein discussed Nvidia stock’s performance on Tuesday. He noted that the shares’ decline was most likely due to the ongoing rotation in the market. That means investors are withdrawing from the stocks that gained recently, thanks to their soaring prices, and start buying bearish assets because of their lower value.

Traders already profited from major tech stocks and now want to reinvest that money into smaller-cap companies. Don’t forget that the US Federal Reserve will announce interest rate cuts this week. If the Fed decides to tighten policy, such stocks will benefit more than Tech giants.

Klein also added that some of these shares are currently overvalued because of the strong demand. It seems tradersoverbought some of the stocks. Such conditions tend to drive the prices higher, inflating them beyond their actual value.

Investors aren’t going to wait for these indexes to bottom out, though—instead, they prefer to move on to other assets.

Besides, even though Nvidia stock is declining now, it’s still trading higher by 109% in 2024, mainly thanks to its dominant position in the tech market. The company is producing chips for training AI systems, which has become the main source of its success lately.

In comparison, the S&P 500 index gained only 14% over the last year. Nasdaq Composite also reported lower profits in the same time frame. However, that might change in the coming months, as it seems competition is strengthening.

However, Nvidia doesn’t go without competition. Some tech companies are contemplating using Apple’s product as an alternative to Nvidia. As a result, AAPL stock soared by 0.26% over the last week, bolstered by this news.

On Monday, Apple announced that it pre-trained two AI models on Google-designed chips instead of Nvidia hardware. These models are crucial for the seamless operation of the Apple Intelligence system. Despite this, Nvidia’s stock remained under pressure.

Will Apple’s AI Models Replace Nvidia Chips?

Even though Apple used Google Tensor chips to train their model, it’s still too early to say whether Apple will become a significant rival for Nvidia, as its models might not be powerful enough. However, Apple plans to partner with other companies, such as OpenAI, which is best known for developing ChatGPT.

Some analysts believe that Microsoft’s developments might also impact Nvidia’s price. Despite the positive outlook, Microsoft (MSFT) still dropped by 0.89% today following recent Windows outages. The company is set to report its fourth-quarter earnings later today.

Nvidia shareholders hope that it will continue investing in hardware and chips to support its artificial intelligence technology. However, the company’s top rival in chips, Advanced Micro Devices (AMD), also plans to report its earnings on Monday, July 31, 2024.

If AMD’s news is positive and it increases its revenue guidance from AI chips, Nvidia might also benefit, provided AMD doesn’t poach its clients. Today, AMD defined the bearish market trend, gaining 0.4% in the morning session.

Other companies, such as Broadcom (AVGO) and Marvell (MRVL), are also designing their own chips. If they manage tooffer a superior product, they might dethrone Nvidia. However, Klein thinks that this won’t happen anytime soon.

What Is the Forecast for Nvidia Stock?

Not only is Nvidia dropping, but Nasdaq sinks as well. That indicates that the broader market is bearish right now. Such fluctuations usually don’t last long, but the majority of shares follow the trend.

Consequently, AVGO declined by 4.46%, Intel lost 2.27%, and Marvell Technology plunged by 2.6%. Meanwhile, Nvidia shares might experience the worst month in almost two years.

The technology sector is waiting for the reports of major companies. If they prove positive, the stocks will likely turn bullish, with Nvidia gaining again. However, a lot depends on the market conditions and tech industry news, as well.

Investors need to make informed decisions to ensure profitable trades. Stay tuned to follow the stock markets and Wall Street news!