Nvidia (NVDA) stock fell 7% on Tuesday, while the overall market fell on the first trading day of the month.
The AI chip maker was the worst performer among the “Magnificent 7” stocks, falling to the lowest level since mid-August.
“I don’t think it’s insulation, there’s a lot of things wrong today,” Bernstein senior analyst Stacy Rasgon told Yahoo Finance Live on Tuesday morning.
Technology stocks (XLK) led the declines, while investors turned to defensive sectors like Staples (XLP) and Utilities (XLU).
Tuesday’s decline comes less than a week after Nvidia posted quarterly results that beat consensus estimates but failed to send the stock price higher.
“The print was actually very good. The problem people had was not so much the turnover, but the gross margins. They are steering the gross margins down a little until the end of the year,” Rasgon said.
Nvidia is expected to ramp up production of its next-generation Blackwell chip in the fourth quarter of this year, which could boost its stock price, Rasgon said.
“I think people are worried right now and are kind of scrambling until those products come to market,” Rasgon says. “Once they start ramping up Q4 and Q1… if that increase is solid, I expect stocks will likely follow suit.”
Wall Street remained mostly bullish on the stock after the earnings release, with Stifel analysts reiterating their buy rating and $165 price target.
“Bigger picture: Data center computing modernization continues and in our view NVDA remains the primary beneficiary,” the analysts wrote last week.
Until last week, Nvidia had led the recent recovery in stock prices, rising nearly 25% in the space of three weeks following a sell-off in the global market.
Despite Tuesday’s losses, the stock is up more than 125% this year.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X @ines_ferre.