Nvidia consistently shatters financial investment records, experiencing both significant gains and losses. The company’s shares recently undergone a drastic plunge, wiping a striking $1 trillion from its market value within just five weeks. In July itself, Nvidia logged four out of the eight biggest market cap falls ever recorded. The tension heightened notably on Tuesday when the company’s market worth plummeted nearly $200 billion (€185 billion) ahead of Microsoft’s earnings announcement.
Contrarily, Microsoft reiterated their commitment to significantly funding AI infrastructure, leading investors to re-invest and allowing Nvidia to become the first-ever firm to accrue over $300 billion in market valuation in one day.
During such volatile periods, investors are strongly advised against trusting oversimplified media rationalisations. A financial analyst quoted by The Financial Times attributed Nvidia’s dramatic fall to various factors such as sector shifts, ongoing economic ambiguity, elections, geopolitical issues and worries about China.
Although those factors are regularly existent, did they not persist on Wednesday when Nvidia saw a $337 billion surge in market cap? While it’s true, Microsoft’s earnings had some effect on Nvidia’s turbulent run, fluctuations of this magnitude are often predominantly powered by fear and greed factors.
In 2024, Nvidia was confirmed as the highest traded stock in the US, and interestingly, discount broker Degiro disclosed that among its Ireland-based clientele, Nvidia came out as the most actively traded stock in the first half of 2024. Traders globally have their sights set on Nvidia. Consequently, the extreme market valuation fluctuations are projected to sustain.