Why Nvidia, Meta, and Amazon Stocks Are Falling Today
What happened
Shares of Nvidia (NASDAQ: NVDA), Meta Platforms (NASDAQ: META), and Amazon (NASDAQ: AMZN) were all sliding this morning as investors processed yesterday's inflation report showing that inflation rose significantly in June and remains at a four-decade high.
Tech stocks have been especially sensitive to negative economic news lately as some investors have left the sector in search of seemingly safer places to put their money.
Shares of Nvidia, Meta, and Amazon were also falling today in response to some analysts cutting their price targets for the stocks. As a result, Nvidia was down 1.9%, Meta fell 2.9%, and Amazon had slid 1.6% as of 11:03 a.m. ET.
So what
Baird analyst Tristan Gerra lowered the price target for Nvidia stock to $150, down from $165. Gerra maintained a neutral rating on Nvidia's shares but lowered his price target, in part, because he believes Nvidia has too much inventory of its consumer graphics processing units (GPUs).
Image source: Getty Images.
The analyst thinks the company will have to reduce consumer GPU shipments before it can launch its new RTX 40 chip series and also said that graphics card monthly sales are below seasonal levels, according to The Fly.
Amazon and Meta didn't fare much better today. A Cowen analyst lowered Amazon's target price from $215 to $210, and Citi analyst Ronald Josey lowered both Amazon's and Meta's price targets this morning.
Josey dropped Amazon's stock target from $205 down to $180 and lowered Meta's stock target from $300 down to $270. He said that there are macro headwinds in the economy that could slow down the companies.
Making matters worse for these tech stocks today is the fact that the Bureau of Labor Statistics released its latest inflation data yesterday, showing that the consumer price index for June rose 9.1%, which was higher than the 8.8% some economists were expecting.
That means that inflation is still at a 40-year high and the persistent rise in prices raises the likelihood that the Federal Reserve will continue to increase the federal funds rate at a rapid pace. A 75-basis-point hike is on the table, and some economists think an increase of 100 basis points, or 1%, could come at the next Fed meeting later this month.
Now what
Nvidia, Meta, and Amazon inventors are concerned that the Federal Reserve could end up tipping the U.S. economy into a recession as it fights inflation.
A slowing economy could negatively impact Nvidia's ability to sell its GPUs, slow down Meta's advertising business, and curb consumer spending on Amazon's e-commerce platform and potentially reduce demand for its cloud computing services.
Add to all of that the fact that analysts cut some of the price targets for these tech stocks today, and it's no wonder why these companies are seeing their share prices slide.
But while the news wasn't great today, investors should remember that holding onto the stocks of great companies -- even during market slumps -- for five years or longer is still one of the best ways to see long-term gains in the market.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Meta Platforms, Inc., and Nvidia. The Motley Fool has a disclosure policy.
