On Monday overnight, NVIDIA plummeted sharply, closing down 6.68%, marking its largest drop in two months. This dragged down the NVIDIA double long ETF, which fell 14%, and also pulled the Nasdaq down by 1.09%. Chip stocks were decimated, with the Philadelphia Stock Exchange Semiconductor Index closing down 3.02%. Broadcom, TSMC, and Qualcomm each closed down 3.7%, 3.54%, and 5.5%, respectively.

Moreover, NVIDIA has fallen for three consecutive days, with a cumulative drop of 12.88% over these three days, a 16% pullback from last Thursday's high, and a market capitalization reduction of over $430 billion, breaking through the $3 trillion mark, ranking third. According to media statistics, this is the largest three-day market capitalization drop among all publicly traded companies. On Tuesday, June 18th, NVIDIA once closed at the top of the market capitalization throne.

NVIDIA's stock price has fallen over 16% from its high on Thursday.

Analysis points out that the "triple witching hour," frequent cashing out by NVIDIA executives, and some investors taking profits have all severely hit NVIDIA's stock price. So, has NVIDIA really "run out of steam"?

What does Wall Street think?

Wall Street bulls believe that NVIDIA's rapid revenue growth and healthy cash flow and profits are a solid backing for the stock price to rise significantly, and it could potentially trigger a new round of industrial revolution. The drop is merely a healthy correction, and they continue to raise the company's target price. This optimism is not baseless. Currently, NVIDIA holds about 80% of the AI chip market in data centers, with tech giants like OpenAI, Microsoft, Alphabet, Amazon, and Meta all scrambling for its processors to support their AI models.

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Media tracking has found that NVIDIA is still highly favored by Wall Street, with nearly 90% of analysts still recommending the purchase of NVIDIA. The average target price set by analysts still has a 10% upside from the current price. However, the rise in NVIDIA's stock price still makes some Wall Street professionals uneasy, as they believe the stock valuation seems to be overestimated and may be "overhyped."

On Sunday, June 23rd, BTIG strategist Jonathan Krinsky warned in a report that NVIDIA's performance has even surpassed any American company during the late 90s tech bubble, and the stock price is already about 100% higher than its 200-day moving average. Since 1990, no American company has been able to be the largest market value company while its stock price is more than 80% higher than the 200-day moving average. The closest was Cisco in March 2000, when its stock price was 80% higher than its 200-day moving average, marking the historical peak of its stock price.

NVIDIA's recent market performance is reminiscent of the tech bubble period of 2000. Although the fundamentals this time are different from the past, NVIDIA's stock price has accumulated a 4,280% increase over the past five years, which is quite comparable to Cisco's 4,460% increase in the five years before its market value reached its peak.

Neville Javeri, head of the Empiric LT Equity team at Allspring Global Investments, pointed out:"In the short term, investors may become fatigued due to excessive enthusiasm for AI, or their concerns about index concentration may deepen."

However, Tom Lee, the managing partner and head of research at Fundstrat Global Advisors, has a completely different view. Lee said in a program:

"Investors are generally reluctant to buy high-priced stocks. But if we are in the middle of an economic cycle, then we will set more new highs in the next five years. A large amount of statistical data shows that the probability of winning when buying at new highs is actually higher than when buying at lows."

Lee's bullish stance stems from the company's unique market position. He said that Nvidia is a stock with a price-to-earnings ratio of 30, and it sells products that no one else in the world can produce. If Nvidia's valuation is very high (with a price-to-earnings ratio of 100), and the market is optimistic about its future, then my view on Nvidia might be different. Because everyone wants to sell Nvidia and call it the peak, I think it still has a lot of room to rise.

Charlie Ashley, an investment manager at Catalyst Funds, said:

"The momentum of Nvidia and general AI stocks is astonishing. In terms of investment, I would not take a contrarian position now."