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Fear and greed as Nvidia shatters more records

Investors should be wary of simplistic explanations as ’most traded stock’ continues to experience wild swings

Nvidia is the most traded stock in the US and, according to Degiro, among its Irish clients. Photograph: Dhiraj Singh/Bloomberg
Nvidia is the most traded stock in the US and, according to Degiro, among its Irish clients. Photograph: Dhiraj Singh/Bloomberg
Proinsias O'Mahony
Sun Aug 04 2024 - 06:00

Nvidia keeps breaking investing records, both on the upside and the downside.

The recent sell-off saw the stock lose an astonishing $1 trillion in market capitalisation in five weeks. In July alone, Nvidia registered four of the eight largest market cap declines in history. Tuesday was especially stressful, with the stock losing almost $200 billion (€185 billion) in market value in advance of Microsoft’s earnings report.

As it happened, Microsoft renewed its pledge to heavily invest in AI infrastructure. Investors piled back in, helping Nvidia become the first company to gain more than $300 billion in market value in a single day.

At wild times like this, investors should be wary of simplistic media explanations. The Financial Times quoted one analyst as saying Nvidia’s sell-off was driven by “sector rotation, continued economic uncertainty, elections, geopolitics and concerns around China”.

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When was the last time there wasn’t uncertainty over the economy, elections, geopolitics and China? Weren’t these same factors present on Wednesday, when Nvidia gained $337 billion in market value?

As already noted, Microsoft’s earnings played a part in Nvidia’s rollercoaster ride, but these swings are largely driven by fear and greed. Nvidia is the most traded stock in the US in 2024. Indeed, discount brokerage Degiro says Nvidia was the most-traded stock among its Ireland-based clients in the first half of 2024.

Traders everywhere are trading Nvidia. Expect wild swings to continue.

Proinsias O'Mahony

Proinsias O'Mahony

Proinsias O’Mahony, a contributor to The Irish Times, writes the weekly Stocktake column