Nvidia’s wild ride continues – The Irish Times

Nvidia continues to test shareholders’ nerves. The company’s stock recently lost $279 billion in market capitalization in a single day, its biggest single-day loss ever.

Record gains and losses are not uncommon for Nvidia. It is responsible for eight of the 10 largest single-day market cap declines in history and five of the 10 largest gains.

As a result, despite recent declines, the share price is up about 125 percent this year.

What’s remarkable about Tuesday’s 9.5% reversal is that commentators aren’t sure what caused it. One Barron’s article, for example, suggested that investors “spent a long weekend mulling over” Nvidia’s earnings report from last Wednesday. It also cited sector rotation, September’s reputation as a tough month for stocks, and the fact that investors “seem to be in a dumping mood” ahead of economic data.

In other words, there is no obvious reason for this record loss. Similarly, there may not have been an obvious reason for the earlier record gains.

To put it bluntly, there is a lot of uncertainty surrounding Nvidia. This is not a clear bubble – skyrocketing profits have accompanied a skyrocketing share price.

Still, there’s huge uncertainty about whether Nvidia’s growth is sustainable. As Nobel Prize-winning economist Eugene Fama told the Financial Times in a recent interview, investors “are betting that AI will rule the world and Nvidia will have a virtual monopoly, but who really knows?”

No one. As such, no one knows whether Nvidia’s next big move will be another record gain — or a more devastating decline.