What's Happening

NVIDIA, a leading player in the AI chip market, has seen a dramatic $406 billion decrease in its market value this week due to mounting concerns about the US economy. This loss amounts to about 20% of NVIDIA's total market value over the last two weeks, highlighting the company's heightened volatility compared to its peers in the tech sector, including Meta, Alphabet, Amazon, and Apple.

Market Volatility

NVIDIA's stock has shown extreme volatility, surpassing even Bitcoin's fluctuations. Over the past month, NVIDIA shares have ranged between $90.69 and $131.26, with a significant drop on Tuesday alone. The company's 30-day realized volatility now stands around 80, which is roughly four times that of Microsoft, double Bitcoin's volatility, and higher than other volatile stocks like Donald Trump's media company and Elon Musk's Tesla.

Market Challenges

NVIDIA's recent performance marks its worst two-week stretch in two years, according to Bloomberg data. The decline was triggered by a tepid forecast and issues with the company's Blackwell chip, leading to reduced investor confidence. The situation worsened with the US Justice Department's subpoenas as part of a growing antitrust investigation, and a disappointing sales forecast from Broadcom added to the negative sentiment surrounding chipmakers.

Stock Performance

Despite the recent slump, NVIDIA's shares have still more than doubled in value in 2024, contributing an additional $1.3 trillion to its market value. Wall Street analysts remain optimistic about NVIDIA's future prospects, citing ongoing investments in AI infrastructure by major clients such as Microsoft, Meta, Alphabet, and Amazon, who together account for over 40% of NVIDIA's revenue and have confirmed their spending plans for the coming quarters.

Financial Outlook

NVIDIA's recent financial results have surpassed expectations, with revenue more than doubling and adjusted earnings also exceeding forecasts. However, the company's revenue forecast fell short of the high end of predictions, leading to some skepticism among market participants who had become accustomed to NVIDIA's exceptional performance. This has raised concerns about the long-term outlook for AI spending.