Nvidia Stocks Plummet Amid Huawei Semiconductor Threat

Nvidia's shares have been underperforming despite strong quarterly results and significant investments in AI infrastructure. The company's stock has fallen 10.1% from its peak of $236.54 on May 14, signaling a correction territory. Despite a sharp run-up last month, Nvidia shares are up only 14% this year, well below peers in the chip sector.

Intel and Micron have risen 225% to 230%, while AMD is up 132%. The sector's benchmark, the iShares Semiconductor ETF (SOXX), has increased by 87%. Last week, Nvidia reported blowout quarterly results, announced an $80 billion share buyback, and raised its dividend.

However, a new risk appears to be weighing on the stock. Huawei discussed a new approach to developing advanced semiconductors that would enable it to produce vastly superior chips more quickly. This new approach, called LogicFolding, improves chip performance by stacking computing blocks vertically, reducing data travel within the processor.

Tigress Financial raised its price target on Nvidia to $425 from $360, keeping a 'Strong Buy' rating on the shares. Despite the recent decline, traders argue that the stock will move higher eventually.