Nvidia shares after chip stock sell-off, Digi Mart USA News: Chip stocks had their worst day since March 2020 on Thursday, and Nvidia fell 9.26% to $181.60 before bouncing 2.78% to $186.64 on Friday.
A retiree who bought 1,000 shares at $121.79 in June 2024 is still up $64,850, but has given back $52,600 since the Oct. 6 record.
The PHLX Semiconductor Index fell 12.25% on Thursday, its biggest one-day drop since March 2020, as investors weighed what the new Congress could mean for data center construction. Nvidia ended the week 8.8% lower and sits 22% below its record close of $239.24 on Oct. 6.
The retiree, a 64-year-old, bought 1,000 shares on June 10, 2024, the day Nvidia’s 10-for-1 split took effect, for a $121,790 investment. At the October record the shares were worth $239,240, and on Friday they were worth $186,640.
The retiree also holds $600,000 in other retirement savings and collects $2,500 a month from Social Security, which makes Nvidia 23.7% of a $786,640 portfolio.
The sell-off hit almost every chip name at once. The iShares Semiconductor ETF fell 12.15%, its worst day since March 2020, and the VanEck Semiconductor ETF fell 11.21%.
Micron fell 17.46% and Lam Research 16.36%. Nvidia’s 9.26% drop was one of the smaller ones.
Friday brought some relief, as chip stocks rebounded across the board. Nvidia traded as high as $194.90 during the day before settling at $186.64.
Measured from the purchase, the investment is still well ahead. The 1,000 shares cost $121,790 and are worth $186,640, a gain of $64,850, or 53.2%, in under two and a half years.
Measured from the peak, the shares have given back $52,600 in a month, with Thursday alone taking $18,530 and Friday returning $5,040 of it.
Nvidia’s quarterly dividend was raised to 25 cents a share this year from 1 cent. On 1,000 shares that is $1,000 a year, a yield of 0.54% at Friday’s price.
The company’s revenue over the past four reported quarters reached $302.97 billion, and its latest quarter’s revenue was up 105.9% from a year earlier.
At $186.64, Nvidia trades at about 23.6 times its earnings over the past year. Of the 62 analysts tracked, 59 rate it a buy or strong buy, and their average price target is $327.14, about 75% above Friday’s close.
Most of those targets were set before this week.
Nvidia reports quarterly results later this month, and that report will show whether customers are still ordering at the pace they were. The retiree’s main risk is concentration: Nvidia is 23.7% of holdings, down from 28.5% at the October peak.
Well-known skeptics are still betting against the sector. Michael Burry disclosed this week that he took profits on a quarter of his bet against the VanEck Semiconductor ETF after Thursday’s plunge, and said the rest of the position remains very large.
Selling 300 of the 1,000 shares at Friday’s price would produce a taxable gain of $19,455, since each share cost $121.79. Federal tax at the 15% long-term rate would be about $2,918, leaving 700 shares worth $130,648, or 16.6% of the portfolio.
If the shares sit in a traditional IRA, the sale creates no tax bill today.
Trimming keeps most of the upside if the analysts are right and the next report is strong, and it moves part of a paper gain into cash before the report. No one knows whether Thursday was the start of a longer slide or a sharp one-day scare.
The $2,918 tax figure assumes the retiree’s income keeps them in the 15% long-term capital gains bracket; a larger sale could push part of the gain higher.
A 64-year-old who turned $121,790 into $186,640 with Nvidia is still well ahead, even after losing $18,530 on the chip sector’s worst day since 2020. The bigger question is whether 23.7% of a retirement should ride on one stock heading into its next earnings report.
