The day before the blockbuster earnings report, Nvidia's stock price has been strong this year. Nvidia, which is firmly in the C position in the field of artificial intelligence, suddenly plummeted, and there is only one core reason - it is too expensive.
Eastern time on Tuesday, Nvidia's stock price opened lower, and the intraday decline once extended to 67%, touching the $677 line, ** the decline narrowed, closing down 435% to close at 694$52, market cap 172 trillion dollars.
Even after Tuesday's sharp decline, Nvidia's stock price has soared by about 40% this year, and its market value has surpassed giants such as Amazon and Alphabet in the past few days to become the third largest company in the United States, after Microsoft and Apple.
There was no apparently very bearish news for Nvidia on Tuesday. **Citing a sharp drop in its share price as investors were concerned about whether Nvidia's quarterly results could justify its high valuation, some traders decided to lock in profits ahead of earnings reports
Some industry insiders commented, "We are seeing a major adjustment in the field of artificial intelligence today." Although the topic of artificial intelligence is still there, the adjustment is long overdue, and it is undoubtedly a defensive day. Others noted that, in addition to earnings reports, investors are specifically wondering how CEO Jensen Huang sees Nvidia's demand for the rest of the year. "Any indication that the AI boom may be slowing could lead to a significant reversal of Nvidia's stock price movement, so it makes sense for traders to be wary ahead of the earnings release. While 2023 is the beginning of the biggest technological change since the birth of the internet in the '90s, investors need to see corporate spending increasing and show the growth path in 2024 and beyond to justify high valuations, said Dan Ives, a well-known analyst at Wedbush. Nvidia will announce its quarterly results after the U.S. stock market on February 21, local time. Previously, Nvidia has reported several consecutive quarters of financial results that have significantly exceeded expectations. At present, the market generally expects that Nvidia's revenue is expected to be boosted by the surge in demand for data center business, and AI-related business will remain strong, especially as Meta, Tesla and others buy GPUs heavily.
Morgan Stanley analysts expect Nvidia's Q4 earnings report to continue to show strong earnings, and the earnings report is likely to beat market expectations again, while benefiting from the emergence of the B100 and a clear business layout, the revenue guidance is expected to remain optimistic.
While Nvidia's stock price surged to an all-time high this month and drove the U.S. as a whole, its forward price-to-earnings ratio has only returned to where it was before its last earnings report last November. Benefiting from profits, Nvidia's valuation is getting lower. It is also the reason why some people in the market think that Nvidia can still rise.
However, for the above-mentioned optimistic outlook for Nvidia's financial report, the market has questioned one after another
Frank Lee, head of technology research at HSBC, said: "The market may be a little hesitant to see if Nvidia can provide strong enough guidance to revive the market and push the share price to higher levels. Some traders said, "If Nvidia only meets expectations or slightly exceeds expectations, it is difficult for the stock price to go higher, and Nvidia needs to significantly exceed expectations before the stock price can go higher." "One thing to keep in mind is that while there are bets that Nvidia will report solid earnings and results**, one thing to remember is that Nvidia doesn't always respond well to stellar results. Sometimes the market's expectations are so high that it gets a stock price reaction that sells the fact. More pessimists believe that Nvidia's earnings report, whether good or bad, will end the rally in U.S. stocks. The reason for this is that any company with a large skewness of call options is likely to experience more selling pressure. The current call options are crazy bets on AI stocks such as Nvidia, once Nvidia announces its earnings report, the implied volatility of the entire options market may decline, and Nvidia's related call options will follow, and drive U.S. stocks *** According to the data of the options analysis company orats, the pricing of the options market shows that Nvidia's fluctuations after the earnings report are plus or minus 11%. If such a fluctuation occurs, it means that Nvidia's market capitalization changes by about $180 billion, which will be one of the largest single-day fluctuations in the history of U.S. stocks.
The negative news for Nvidia on Tuesday was, **, **, that Microsoft quietly made efforts to reduce its dependence on Nvidia and develop network card alternatives. The network card developed by Microsoft is similar to NVIDIA's ConnectX-7, and it may take more than a year to develop, if the development is successful, it can not only save Microsoft's money, but also reduce the time for OpenAI to train AI large models with Microsoft servers. It should be noted that during the previous surge of Nvidia, such news could not hinder the momentum of its stock price.
Nvidia's ** on Tuesday made a number of chip stocks and AI concept stocks follow**:
Chip stocks fell for three consecutive days and underperformed on Tuesday, with the Philadelphia Semiconductor Index and the Semiconductor Industry ETF SOXX falling more than 2% in early trading and more than 3% in midday trading, closing down nearly 16% and 17%。ARM fell 10% at the beginning of the session and closed down 51%。AMD fell 68%, closing down 47%。AI concept stocks as a whole continued to fall sharply and underperformed for several days. The ultra-micro computer (SMCI), which closed down 20% after hitting a new intraday high on Friday, fell 138%, closing down nearly 2%. c3.AI (AI) fell more than 8% intraday and closed down nearly 59%。Adobe (ADBE) fell more than 3% at the beginning of the session and closed down nearly 09%。soundhound.AI (SOUN) turned up after falling more than 4% in early trading, closing up more than 4%, bucking the trend**. Wall Street news, welcome **app to see more.