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Nvidia adds record $329 billion in value as volatility soars
(Bloomberg) — Nvidia Corp.’s wild ride this week is headed for the record books.
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The world’s third-most valuable company added a record $329 billion in value — shattering the single-day record it has set repeatedly in recent months.
The 13% surge comes a day after a 7% drop wiped more than $193 billion from the company, which is now worth $2.9 trillion, continuing a wave of volatility that has made even notoriously turbulent assets like Bitcoin seem unmoved.
In July alone, stocks suffered declines that accounted for four of the eight biggest losses in market capitalization, according to data compiled by Bloomberg.
The volatility comes as investors grapple with a violent rotation from high-flying technology stocks to left-behind companies that would benefit from Federal Reserve rate cuts. The chipmaker surged 150% in the first six months of the year before better-than-expected inflation fueled bets the central bank would cut as early as September.
Investors have pocketed profits accumulated in artificial intelligence bets and piled into banks and cyclicals. The rotation accelerated a week ago when Alphabet Inc.’s AI spending left investors worried that profits would be a long time coming. Those concerns eased somewhat after Advanced Micro Devices Inc. gave an upbeat forecast based on its AI efforts, sparking a fresh rush back into the technology. Enthusiasm for the sector and Nvidia accelerated on Wednesday after Fed Chairman Jerome Powell said a September interest rate cut was on the table.
“The volatility in Nvidia shows how confused investors are right now,” said Matt Maley, chief market strategist at Miller Tabak + Co. “They’re worried that the massive capital investment in AI won’t create the kind of return on investment that people were expecting last year.”
The swings are exacerbated by company- and industry-specific events, such as AMD’s earnings and Microsoft Corp.’s pledge to spend billions more on its AI infrastructure. Macro news, especially around the timing of Fed rate cuts and geopolitical tensions, also drive market-wide moves that engulf even the largest companies.
“Microsoft’s announcement of increased capital spending, driven largely by cloud and AI-related demands, strengthens Nvidia’s near-term sales outlook,” said Bloomberg Intelligence analyst Kunjan Sobhani.
The story continues
Meta Platforms Inc., another big tech company spending billions on AI, is due to report earnings after markets close on Wednesday. Investors in the Facebook-owned company are hoping it can do a better job than Microsoft Corp. and Alphabet Inc. of convincing them that these big investments will pay dividends sooner rather than later.
While major stocks like Microsoft Corp. and Apple Inc. have had big days in the stock market after significant catalysts, Nvidia Inc. is increasingly producing wild swings in broader sentiment.
Investors “are concerned that the equity investment story could fade away,” Maley said. “However, they also know that NVDA is still doing extremely well and FOMO still plays a role every time the stock bounces after a significant decline.”
–With assistance from Tom Contiliano, Carmen Reinicke and Jeremy Herron.
(Adds details in sixth paragraph. An earlier version corrected Nvidia’s market value ranking in second paragraph.)
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