Nvidia Stock Decline Shows Bitcoin Is Still Much More Stable

Key Points:

• Nvidia lost approximately $406 billion in value this week, driven by investor concerns over the US economy and an overhyped AI market.
• The Nvidia stock decline has shown extreme volatility, with a 30-day realized volatility of 80, surpassing even Bitcoin and other tech stocks.

Nvidia stock decline erased some $406 billion in value this week alone, as the more comprehensive takeaways from this quarter beat expectations overall but point to heavy selling across the board into key equity benchmarks.

Read more: US Stock Plunge: Apple, Microsoft, Nvidia Down Big, JPMorgan Sees Bargains

Nvidia Stock Decline With Extreme Volatility

According to Bloomberg, the Nvidia stock decline coincides with the overall worry about the health of the US economy and the sustainability of the booming AI trade that may have overextended itself for some.

In the past fortnight alone, Nvidia, the world’s largest producer of AI chips, has seen a fifth of its market value vaporized. Its volatility has leapt above both its cohorts in the “Magnificent Seven” grouping of technology stocks, and Bitcoin too.

At the same time, over the past 30 trading days, shares in Nvidia have swung in a range from $90.69 to $131.26, forcing its 30-day realized volatility to 80-that’s four times that of Microsoft, twice as much as Bitcoin and even more than meme stocks like Donald Trump’s media company and Elon Musk’s Tesla.

The recent Nvidia stock decline was the worst two-week stretch in two years for the company. A lukewarm forecast and technical issues with the company’s Blackwell chip were some of the reasons that cooled investor optimism. Besides that, subpoenas from the US Justice Department connected with an antitrust probe, along with a disappointing sales forecast from Broadcom, have not been helpful to sentiment toward chipmakers.

Earnings Shortfall Clouds Long-Term AI Investment Outlook

Even with this pullback, Nvidia has been an outperformer for investors in 2024, up more than 100% year-to-date, adding $1.3 trillion in market value. Major customers like Microsoft, Meta, Alphabet, and Amazon have all reaffirmed spending on the infrastructure needed for AI trends, which are likely to continue well into quarters to come.

While Nvidia’s latest earnings report beat estimates both for revenue and adjusted earnings, failure to meet expectations on the high end has reined in investor enthusiasm accustomed to nothing less than spectacular. That has been dampening optimism about the sustainability of AI-related spending, and there is ongoing volatility in its shares. To the long-term investor, though, this may be a buying opportunity.