Both history and folklore are replete with accounts of circumstances looking incredibly grim — until an unexpected catalyst delivers a much-needed reprieve. Investors of semiconductor giant Nvidia Corp (NASDAQ:NVDA) will be hoping for just such a turnaround. While the company has practically been synonymous with the remarkable rise of artificial intelligence, NVDA stock hasn’t been looking like itself lately. Still, the volatility may present a statistically backed upside opportunity for contrarians.
To be sure, no one’s saying that Nvidia is headed for the garbage bin. Since the start of the year, NVDA stock has gained around 24%, which is very respectable considering its prior blitzkrieg of the market. Nevertheless, since the close of Aug. 12 (where shares finished the session at $183.16), NVDA has dropped over 9%.
It raises the obvious question: what happened?
On paper, the narrative appeared auspicious for NVDA stock. Once again, the semiconductor juggernaut posted a blowout quarter with what would broadly be considered strong guidance. Nvidia easily beat Wall Street’s consensus targets on the top and bottom lines. It also delivered tremendous growth on both headline metrics against a year-ago comparison. Plus, for its October quarter, management guided revenue between $52.92 billion and $55.08 billion, above the consensus estimate of $52.96 billion.
Still, some analysts had hoped for a bit more in terms of guidance. Additionally, uncertainty over sales in China — which is a critical market — dampened enthusiasm. If that wasn’t enough of a concern, Broadcom Inc (NASDAQ:AVGO) laid down the gauntlet with its latest earnings results.
It wasn’t so much about the raw numbers, though they were excellent, with a robust top-and-bottom-line beat. Rather, AVGO stock popped dramatically higher on Friday thanks to the underlying company’s optimistic forward guidance and subsequent analyst price target upgrades.
Helping move the needle for AVGO was Broadcom’s assertion that it can take market share from Nvidia in the AI chip space. Subsequently, NVDA stock had arguably little choice but to fade away. Still, this may be an …