Introduction
Nvidia shares went up on Wednesday. The rise came after two days of big falls. The chip maker’s stock has had a wild week. Here is what happened, and what to watch next.
Key Figures
- Shares rose Wednesday: about 3%
- Shares fell Tuesday: 5.47%
- Shares fell Monday: 4.3%
- Fall since October 2: more than 25%
- Earnings day: November 17
What Happened
Nvidia shares rose about 3% on Wednesday. The stock had fallen 5.47% on Tuesday and 4.3% on Monday. Seeking Alpha said the shares were up more than 4% in early trading on Wednesday. The stock is still down a lot from where it was in October. Stock means a small piece of a company.
On Wednesday, Morgan Stanley removed Nvidia as a top pick. Morgan Stanley had named Nvidia a top pick on October 2. Since then, the shares have fallen by more than 25%. Morgan Stanley still rates the stock Overweight, which means it still likes the stock.
Why It Happened
The fall started with questions about Jensen Huang, the chief executive of Nvidia. Huang is facing questions about his personal life, after reports about a relationship with a woman reported to be a Chinese spy. On Tuesday, Nvidia hired the law firm Wachtell Lipton Rosen and Katz to check if company secrets or national safety were put at risk. Huang went back to the office on Monday, and he was in the office on Tuesday. The questions about Huang started last week, when Nvidia said it would brief Congress on November 18.
Investors have two main worries. First, the United States might put more limits on Nvidia. Second, more problems might come out. Zacks analyst John Blank said the sell-off shows both worries.
Why It Matters
Nvidia is one of the biggest companies in the world, and its chips power much of artificial intelligence. Artificial intelligence means computers that can learn and do smart tasks. When Nvidia’s stock moves, the whole stock market often moves with it. A fall of more than 25% in a few weeks is a big move for such a large company. Stocks have had a rough week already, as the Nasdaq fell 5.52% on November 5 and entered a correction.
What Happens Next
Nvidia will report its earnings on November 17. Earnings are a report on how much money a company made. Bank of America analyst Vivek Arya set out three paths for the stock. In the best path, the issue stays contained, and Huang stays in charge.
In the middle path, long worry about the issue hurts the stock’s value before earnings. In the worst path, bad findings, a change in leadership, or tighter limits force a rethink of earnings. All eyes will be on November 17.
Final Thoughts
This week shows how fast a stock can fall on worry alone. The shares bounced back a little on Wednesday, but the questions are not gone. The earnings report on November 17 will be the next big test. Until then, investors will watch every new detail.
Quick Questions
How much did Nvidia stock rise on Wednesday?
It rose about 3% on Wednesday. It was up more than 4% in early trading, according to Seeking Alpha.
Why did Morgan Stanley drop Nvidia as a top pick?
Morgan Stanley removed Nvidia as a top pick after the shares fell more than 25% since October 2. It still rates the stock Overweight.
When does Nvidia report earnings?
Nvidia reports earnings on November 17. It will also brief Congress on November 18.
Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice.
Sources: CNBC, Seeking Alpha
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