Nvidia (NASDAQ: NVDA) shares fell approximately 2% in early trading Tuesday, as a continued climb in long-term Treasury yields pressured semiconductor stocks and dragged on the broader market. The decline was part of a wider pullback across chip names, with Western Digital down nearly 7%, Sandisk losing more than 6%, and Marvell Technology and Seagate Technology each falling over 6%.
The S&P 500 slipped 0.5%, while the Nasdaq Composite dropped 1.1%. The Dow Jones Industrial Average shed about 191 points, or 0.4%. The 30-year Treasury yield rose more than one basis point to 5.323%, after reaching its highest level since June 2007 on Monday. Yields have been climbing as investors remain concerned about persistent inflation and elevated oil prices. US crude gained another 0.9% Tuesday to trade above $85 a barrel, following a rise on Monday, as negotiations between the US and Iran stalled.
Recent rally faces headwinds
Tuesday's decline comes after a strong rebound for Nvidia in recent weeks. The stock closed around $225 on Monday for a second consecutive session, a level not seen since mid-May. That advance pushed its year-to-date gain above 16%, outpacing the Nasdaq Composite's roughly 15% rise and the S&P 500's 13% gain. From the market bottom on July 29, Nvidia shares have gained about 15%, compared with a 1.5% advance for the iShares Semiconductor ETF and nearly 2% for the VanEck Semiconductor ETF.
For much of the year, Nvidia had trailed those semiconductor baskets as investors shifted toward memory and CPU stocks and questions emerged over the sustainability of its growth. The recent rebound has coincided with a broader recovery in the AI infrastructure trade. Nvidia's increased financial support for key customers is also looking less risky than initially feared, while a new financing initiative could make funding the broader AI buildout more attainable. New details on revenue growth at OpenAI and Anthropic, both major Nvidia chip customers, have also supported expectations that those companies can continue spending on compute.
BofA stays bullish ahead of earnings
BofA Securities reiterated its Buy rating and $350 price target on Nvidia following the company's $105 billion in commitments related to OpenAI. After discussions with Nvidia senior management, BofA said the chipmaker remains committed to securing chip supply, land, power, and infrastructure for frontier AI labs and so-called neo-clouds. The strategy is intended to diversify Nvidia's customer base beyond public hyperscalers that are increasingly developing their own custom chips.
BofA cited solid GPU rental rates, compute scarcity, and Nvidia's free cash flow generation as factors supporting the company's commitments. The firm also highlighted risks if AI demand slows, which could pressure Nvidia's growth rate and balance sheet. BofA expects Nvidia to provide more disclosure around its off-balance-sheet commitments when it reports earnings on August 26. The firm noted that Nvidia trades at 18 times and 15 times calendar 2027 and 2028 enterprise value to free cash flow, respectively, compared with its blended valuation multiples of 36 times and 22.5 times. BofA views that valuation gap as a compelling opportunity while maintaining its $350 price target.
Investors are also watching the broader AI financing landscape. Nvidia's $500 billion AI funding plan has drawn attention to leverage in the sector, while recent Wall Street reactions suggest some easing of circularity fears. Additionally, Nvidia's $105B OpenAI lease guarantee underscores its push into AI infrastructure, and SpaceX's 13F filings reveal significant stakes in Nvidia and other tech giants.
Nvidia is scheduled to report its fiscal 2027 second-quarter results on August 26. The company's ability to navigate rising yields and maintain its growth trajectory will be closely watched by investors.
This article is for informational purposes only and does not constitute financial advice.
