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Nvidia<\/a> Corp. shares fell on Monday, with the AI-focused chipmaker entering correction territory as it extends a sharp recent selloff.<\/p>\n The stock fell 4.8% and is on track for its third straight negative session. It has dropped 12% over the three-day slide, putting it past the 10% threshold that represents a correction. The drop weighed on chipmakers with the Philadelphia Stock Exchange Semiconductor Index falling as much as 2.2% on Monday. Broadcom<\/a> Inc., Taiwan Semiconductor Manufacturing<\/a> Co. and Qualcomm<\/a> Inc. were all lower by at least 2%.<\/p>\n The three-day drop erased more than $400 billion from Nvidia\u2019s market capitalization, putting it back below the $3 trillion threshold, as well as below both Microsoft<\/a> Corp. and Apple<\/a> Inc. in size. Nvidia\u00a0briefly claimed<\/a>\u00a0the title as the world\u2019s largest stock last week.<\/p>\n \u201cIn the near-term, it is plausible that investors begin suffering from AI-fatigue or become more broadly concerned about index concentration,\u201d said Neville Javeri, portfolio manager and head of the Empiric LT Equity team at Allspring Global Investments.<\/p>\n Even with the slump, Nvidia remains up more than 140% this year, making it the second-best performer among S&P 500 Index components, behind Super Micro Computer<\/a> Inc., another favorite AI play.<\/p>\n The stock suffered a drawdown of about 20% earlier this year, although it quickly returned to all-time highs.<\/p>\n While investors have flocked to Nvidia given the sky-high demand for its chips used in AI processing, the scale of Nvidia\u2019s rally \u2014 it also soared about 240% over the course of 2023 \u2014 has underlined concerns about its valuation. The stock trades at nearly 23 times estimated sales over the next 12 months, making it the most expensive in the S&P 500 by this measure. Still, it remains well liked on Wall Street. Nearly 90% of the analysts tracked by Bloomberg recommend buying, and the average analyst price target points to upside of about 10% from current levels.<\/p>\n \u201cThe momentum in Nvidia and AI stocks in general has been staggering,\u201d said Charlie Ashley, portfolio manager at Catalyst Funds. \u201cIn terms of investing, I would not be a contrarian right now.\u201d<\/p>\n<\/div>\n\nSubscribe to the Fortune Next to Lead newsletter to get weekly strategies on how to make it to the corner office. Sign up for free<\/a> before it launches on June 24, 2024.<\/div>\n<\/div>\n