Shares of chip giant Nvidia fell nearly 7 percent overnight

Since briefly surpassing tech giants Microsoft and Apple as the world's most valuable publicly traded company last Tuesday (June 18), chip giant Nvidia has lost more than $500 billion in market value in just the past three trading days. Its shares fell nearly 7 percent overnight to close at $118.11. It was still down 1.30 percent at $116.57 in after-hours trading.

Nvidia's market value has fallen to $2.91 trillion, about $550 billion less than its peak last Thursday (June 20), making it the third most valuable public company in the world.

Year-to-date, Nvidia shares are up 145.19%. Nvidia's gains alone account for about a third of the S&P 500's gains this year. Because of this, many investors have previously said on various social platforms that it is worrisome that Nvidia has so much "control" over the index. Some of them even worry that Nvidia's massive stock rally could trigger a broader market rout if there is a massive arbitrage.

It also emerged last Friday that Jen-Hsun Huang, the chipmaker's chief executive and co-founder, sold nearly $95 million worth of his own shares at a time when Nvidia was the world's most valuable publicly traded company. Although the trades were "pre-arranged" sales by Huang as early as March under the 10b5-1 sales rule, according to SEC filings, it's hard not to wonder whether insiders selling their Nvidia shares are signaling that they aren't optimistic about the stock's future, or at least in the short term.

Some market participants believe that Nvidia's share price has soared for a long time and should be adjusted

There are also some market participants who have reservations about Nvidia's rapid rise, because the scenario has not only led them to compare Nvidia to the old Cisco Systems. Cisco Systems, a maker of networking equipment, became the world's most valuable public company at the height of the dotcom boom in March 2000. But the following year, the dot-com bubble burst, and Cisco Systems shares fell 80%. As telecoms groups cut back on broadband infrastructure spending, Cisco Systems is slipping out of investors' minds.

Although Nvidia shares are down about 16% from last Thursday's intraday high of 140.76, some market participants believe that after a long surge, Nvidia shares must also make a correction, which is "healthy" for the stock.

Of the 41 analysts at Tipranks, 38 still have a 'buy' rating on the stock and three have a 'hold' rating, with an average one-year price target of $156.35.