Nvidia's share price drops along with other AI firms, but all is peachy as they collectively remain some of the most valuable companies on the planet

pcgamer.com:

The onset of AI has clearly been a fortuitous development for Nvidia, as well as for other companies cemented in the AI industry. But there's rarely a linear path for companies even in such promising markets, and we see hints of this now with Nvidia's and other AI companies' share prices starting to drop.

As the BBC points out, share prices have dropped for a number of tech companies in both the US and Asia. This includes Nvidia, which has seen its shares drop by 6.8%. Other companies facing losses include Google's parent company Alphabet, Apple, Microsoft, and Tesla.

Although we PC gamers might sometimes be loathe to admit it, Nvidia is an AI company, now, not a PC gaming company. And although it's been a titan supplier for the datacentre industry prior to AI, the company has skyrocketed by pretty much every metric since the AI boom, as it's currently the number one seller of chips for AI workloads. Heck, Nvidia became the world's most valuable company just one month ago.

And we should certainly remember this when we hear talk of share prices falling. Nvidia is still the AI titan it was last month, as are the other AI companies now seeing downturn. To take another example, the BBC tells us chip maker SK Hynix is one of the Asian companies to see its shares drop, but we also see (via Reuters) that it's just had its highest quarterly profits since Q3 2018. This is thanks, in part, to demand for high bandwidth memory (HBM), which it happens to sell to Nvidia.

So, what gives? Well, share prices don't reflect a company's overall health, although they can certainly point towards perceived value or future value of the company. If share prices drop, this means shares in the company have started to be sold at lower and lower prices, in what might seem like a race towards the bottom, wherever that new bottom (the new share value) might be. When this happens, it can indicate that the market thinks the company is overvalued relative to where it'll end up moving forwards.

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