In a surprising turn of events, the share price of NVIDIA, a leading designer of graphics chips, has seen a significant drop today. The stock, which has been very volatile with 8 moves greater than 5% over the last year1, fell 5.7% in the morning session. The artificial intelligence (AI) leader’s share price was down 5.9% as of 1 p.m. ET.
While there isn’t any business-specific news pushing NVIDIA lower today, the stock is losing ground due to macroeconomic concerns and underwhelming business results from some major players in the retail space.
Macroeconomic Concerns
The recent quarterly results from retail leaders Walmart and Home Depot have signaled potential pressures. While Walmart beat earnings expectations and issued encouraging forward guidance, the company’s guidance could be taken as a sign that the economy is still running hot and that inflation isn’t tapering enough. Home Depot was more explicit with its comments on inflation, stating that it was seeing unfavorable demand trends due to persistent inflation.
These results and commentary from Walmart and Home Depot are often viewed as bellwethers for the broader economy. Their quarterly results can provide a lot of valuable information about consumer sentiment and overall macroeconomic conditions.
Impact on NVIDIA
The graphics processing unit (GPU) specialist’s share price is being pushed lower due to these results and commentary. The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Despite the current dip, NVIDIA’s shares have had a good run since the fourth quarter of 2023 as markets expect the Fed to begin cutting rates as early as the first half of 2024 amidst cooling inflation data. NVIDIA is up 42.1% since the beginning of the year, and investors who bought $1,000 worth of NVIDIA’s shares 5 years ago would now be looking at an investment worth $17,263.
Conclusion
While today’s drop in NVIDIA’s share price may concern some investors, it’s important to remember that stock prices are influenced by a variety of factors, including broader market trends and macroeconomic conditions. Investors are advised to keep a close eye on these developments and make informed decisions.
Disclaimer: This article is for informational purposes only and should not be considered as investment advice. Always consult with a financial advisor before making any investment decisions.
