Nvidia's stock price drops 13% in three days after briefly holding the title of the most valuable company.

• On Monday, Nvidia's shares dropped by 6.7%, marking their third consecutive day of decline, and the stock has now fallen 13% from its peak value last week.
• Some of the biggest gainers of late were stocks that had steep drops on Monday due to their ties to the artificial intelligence boom.
• Nvidia and similar momentum stocks may be experiencing gains as investors lock in profits after several hot months.

Despite briefly holding the title of the world's most valuable company last week, its stock has fallen for three consecutive trading days, resulting in a 13% decline from its peak value.

The chipmaker experienced its second-steepest drop of the year on Monday, with the stock falling 6.7% to $118.11. This decline in Nvidia was accompanied by a slide in chipmakers and other tech companies that have been linked to the artificial intelligence boom.

Nvidia's AI chip-powered servers experienced an 8.7% decline in sales, while competitors in the same market saw a 5.2% drop.

While chip designers dropped 5.8%, semiconductor giants dropped 5.5% and 3.7%, respectively.

Numerous companies have experienced significant growth in recent years due to investors' belief that they will profit from increased spending on AI technology.

Despite a three-day slump, Nvidia's value has nearly tripled in the past year. Last week, it was the most valuable U.S. company with a market capitalization over $3 trillion before giving up some of those gains. Nvidia was the fourth-biggest loser in the S&P 500 on Monday. Meanwhile, Super Micro is still up almost 200% in 2024.

After a few hot months, investors may be seizing the chance to secure profits.

"According to CNBC, Stephanie Link of Hightower stated on Friday that while she believes the party isn't over yet, Nvidia shares have had a great run and there are other technology options with better risk/reward potential. She labeled Nvidia shares as "overloved.""

Nvidia reports that its AI GPUs are in high demand, with companies such as Microsoft, Google, Amazon, Oracle, and Meta purchasing billions of dollars worth of the chips to power their data centers and cloud services.

This year, Nvidia will begin shipping its new AI chips, Blackwell, which some analysts predict will initiate a new growth cycle for the chipmaker and its partners.

According to Ray Wang, founder of Constellation Research, Nvidia's performance will persist for the next 18-24 months. He advised buying the dip on CNBC's Squawk Box on Monday.

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