Nvidia’s earnings are still a week away, but the stock has already fallen back to March levels. 📉
During Tuesday’s U.S. trading session, Nvidia ($NVDA ) dropped more than 6% at one point to around $167, falling below $170 and hitting an intraday low of $166.24. On Monday, it had just closed down 4.27% at $178.67, putting its two-day decline at about 10%.
From its record high of $243.37 on October 6, the stock has now fallen roughly 30%, including a drop of about 27% in a month. The Nasdaq was down more than 1% that same evening, while $BTC also slipped back to around $73,300. Risk assets were taking a hit across the board.
There are two reasons behind the sell-off. One is company-specific: a personal controversy involving Jensen Huang came to light over the weekend, and the board has launched an independent investigation. Citi cut its price target from $315 to $285 while maintaining a Buy rating, and Wells Fargo lowered its target from $315 to $300. The other reason is macroeconomic: October’s core CPI came in at 0.3%, right at the 50-basis-point threshold Waller had mentioned. The odds of a 25-basis-point rate hike in December surged to around 96%, and expectations of tighter money have already weighed on high-valuation stocks.
Next Tuesday, November 17, Nvidia reports its Q3 earnings. The market consensus is for earnings of about $2.53 per share and revenue of around $111.4 billion.
Our take: This sell-off isn’t about chip demand. It’s uncertainty around “people” meeting uncertainty around “money”—two things colliding at once. There are three possible scenarios: if earnings beat expectations and guidance holds firm, the break below $170 could prove to be a false dip; if the investigation gathers steam or guidance is cautious, the stock may retest the lows around $165 from late March; and if Friday’s PPI comes in hot again, Nvidia could keep grinding lower along with the broader market. What about Fanfan? First, let’s see how management addresses the investigation on earnings night, then we can talk about direction.
During Tuesday’s U.S. trading session, Nvidia ($NVDA ) dropped more than 6% at one point to around $167, falling below $170 and hitting an intraday low of $166.24. On Monday, it had just closed down 4.27% at $178.67, putting its two-day decline at about 10%.
From its record high of $243.37 on October 6, the stock has now fallen roughly 30%, including a drop of about 27% in a month. The Nasdaq was down more than 1% that same evening, while $BTC also slipped back to around $73,300. Risk assets were taking a hit across the board.
There are two reasons behind the sell-off. One is company-specific: a personal controversy involving Jensen Huang came to light over the weekend, and the board has launched an independent investigation. Citi cut its price target from $315 to $285 while maintaining a Buy rating, and Wells Fargo lowered its target from $315 to $300. The other reason is macroeconomic: October’s core CPI came in at 0.3%, right at the 50-basis-point threshold Waller had mentioned. The odds of a 25-basis-point rate hike in December surged to around 96%, and expectations of tighter money have already weighed on high-valuation stocks.
Next Tuesday, November 17, Nvidia reports its Q3 earnings. The market consensus is for earnings of about $2.53 per share and revenue of around $111.4 billion.
Our take: This sell-off isn’t about chip demand. It’s uncertainty around “people” meeting uncertainty around “money”—two things colliding at once. There are three possible scenarios: if earnings beat expectations and guidance holds firm, the break below $170 could prove to be a false dip; if the investigation gathers steam or guidance is cautious, the stock may retest the lows around $165 from late March; and if Friday’s PPI comes in hot again, Nvidia could keep grinding lower along with the broader market. What about Fanfan? First, let’s see how management addresses the investigation on earnings night, then we can talk about direction.
