Nvidia shares drop 3.4% as semiconductor sector falls

Shares of Nvidia fell sharply on Monday, July 13, dropping 3.4% and contributing to a broader decline in the semiconductor sector. The stock closed at $203.53, extending a recent period of underperformance despite the company reporting explosive financial growth driven by demand for its artificial intelligence data center chips.

The chipmaker's first-quarter revenue for its 2027 fiscal year surged 85% year-over-year to $81.6 billion, with its Data Center segment alone growing 92% to $75.2 billion. The company has provided strong guidance, forecasting approximately $91 billion in revenue for the current quarter. Chief Executive Jensen Huang has described the buildout of AI infrastructure as accelerating at extraordinary speed.

However, investor sentiment appears to be decoupling from these robust fundamentals. Nvidia's stock is up roughly 9% for the year through Monday, significantly trailing the 74% gain of the PHLX Semiconductor Index over the same period. The stock is now trading at roughly 19 times forward earnings, which analysts note is its lowest valuation multiple in more than a decade.

Recent pressure has been attributed to several factors, including a broader rotation...