Nvidia’s $400 Billion Tumble This Week Makes Bitcoin Look Calm

(Bloomberg) -- Nvidia Corp. has wiped out more than $400 billion in value this week, weighing on key equity benchmarks as jitters spread over the health of the US economy and an AI trade that may have gotten ahead of itself.

The world’s largest artificial-intelligence chipmaker has shed a fifth of its value over the past two weeks. The declines also showcase a more pressing issue for investors in the $2.5 trillion giant: Its volatility now dwarfs its Magnificent Seven peers and makes Bitcoin look like a port of calm. 

Nvidia shares have swung between $90.69 and $131.26 over the past 30 trading days, with a record amount of market value being wiped out Tuesday. That level of gyration drove its 30-day realized volatility up to 80 — more than four times the level of Microsoft Corp., double Bitcoin’s figure and higher than meme stocks like Donald Trump’s media company and Elon Musk’s Tesla Inc.

The stumble has pushed the stock toward its worst two-week stretch in two years, data compiled by Bloomberg show. The declines came after a tepid forecast and issues for its Blackwell chip, which dented investor euphoria. Then came news that the US Justice Department sent subpoenas in an escalating antitrust probe. Adding to the gloom for chipmakers broadly, Broadcom Inc. released a disappointing sales forecast. 

“You’re just in a very difficult market environment right this second,” said Rhys Williams, chief strategist at Wayve Capital Management LLC, adding that the AI trade is still in its early days. Still, “on a day-to-day basis, where the bottom is, is anybody’s guess.”

Rewarding Year 

Of course, the stock has rewarded investors handsomely this year, even with the recent slide. The shares are still up more than 100% this year, adding about $1.3 trillion in market value. And Wall Street roundly expects that Nvidia remains well positioned as companies build out infrastructure related to AI, a process that’s expected to last for several more quarters at least. 

Nvidia’s biggest customers — notably Microsoft Corp., Meta Platforms Inc., Alphabet Inc., and Amazon.com Inc., which together comprise more than 40% of Nvidia’s revenue, data compiled by Bloomberg show — affirmed their spending plans in their most recent quarters.

Nvidia’s results last week confirmed this rosy view. Revenue more than doubled and came in better than expected, as did adjusted earnings. The company also gave a revenue forecast that beat the analyst consensus, though it failed to meet the high end of estimates. 

That result underwhelmed market participants who had grown accustomed to blowout reports. It also fed into concerns for those who are skeptical about the long-term outlook for spending on AI. 

It all means that as investors digest the evolution of the AI theme, the volatility in shares of Nvidia and other chipmakers will likely persist. For money managers who want to get in for the long haul, that could spell opportunity. 

“For a long-term investor, this is a good time to start picking away,” said Williams at Wayve Capital. “If somebody handed me new money today, I would be enthusiastically adding some AI-related stocks.”

--With assistance from Ryan Vlastelica.

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