$500 billion in a day: Nvidia’s Wall Street record sends founder up the rich list
By Subrat Patnaik
Nvidia’s wild Wall Street ride this week is headed for the record books.
The artificial intelligence company has just added a record $US329 billion ($503 billion) in value — obliterating the single-day record that it has repeatedly set in the past few months.
Jensen Huang’s Nvidia has had a rollercoaster run on Wall Street. Credit: Bloomberg
The 13 per cent rally comes a day after a 7 per cent rout wiped out more than $US193 billion from the now $US2.9 trillion company, continuing a run of volatility that makes even notoriously turbulent assets like Bitcoin look solid. The company’s founder Jensen Huang added nearly $US12 billion ($18.3 billion) to his fortune, a record tally to match Nvidia’s record day. He is now the 14th-richest person in the world, according to the Bloomberg Billionaires index.
It was the biggest one-day dollar gain for Nvidia’s co-founder and chief executive officer, exceeding the $US9.6 billion he made on February 22 when the chipmaker’s shares spiked after strong earnings, according to the Bloomberg Billionaires Index. It also pushed him back above the $US100 billion mark for the first time in a week, bringing his total net worth to $US102.8 billion.
Nvidia has been on a wild ride recently as investors suddenly rotated out of high-flying technology stocks ahead of an expected Federal Reserve rate cut in September. That reversed on Wednesday after competitor Advanced Micro Devices gave an upbeat revenue forecast, reflecting strong demand for artificial intelligence.
In July alone, the shares have endured routs that account for four of the eight biggest market cap wipeouts, according to data compiled by Bloomberg.
The volatility comes as investors grapple with a violent rotation out of high-flying technology shares into left-behind companies that would benefit from Federal Reserve rate cuts. The chipmaker rallied 150 per cent in the first six months of the year before better-than-expected inflation stoked bets that the central bank would cut as soon as September.
Investors pocketed profits rung up on artificial intelligence bets and piled into banks and cyclical companies. The rotation accelerated a week ago, when Alphabet’s AI spending left investors worried profits would be a long time coming. Those worries eased somewhat after Advanced Micro Devices gave an upbeat forecast on the back of its AI efforts, prompting a fresh rush back into tech.
“The volatility in Nvidia shows how confused investors are right now,” said Matt Maley, chief market strategist at Miller Tabak + Co. “They’re worried that the huge capital investment into AI will not create the kind of return on investment that people have been hoping for over the past year.”
The swings are exacerbated by company- and sector-specific events, such as AMD’s results and Microsoft’s pledge to spend billions more on its AI infrastructure. Macro news, especially around the timing of Fed rate cuts and geopolitical stresses, also drive market-wide moves that engulf even the biggest companies.
“Microsoft’s announcement of increased capital spending, primarily driven by cloud and AI-related demands, fortifies Nvidia’s near-term sales outlook,” said Bloomberg Intelligence analyst Kunjan Sobhani.
Nvidia now has a market capitalisation of $US2.9 trillion.Credit: Bloomberg
Meta, which owns Facebook, Instagram and WhatsApp, showed it was not changing course on its AI spending as it released its results after the closing bell. The company said it had spent $US8.5 billion in the second quarter on computing infrastructure for AI, building the immersive world of the metaverse and other expenses, up 33.4 per cent from a year ago.
While large stocks like Microsoft and Apple have had big stock-market days following significant catalysts, Nvidia is increasingly producing sharp swings on wider sentiments.
Investors “worry that the capital investment story might fade,” Maley said. “However, they also know that NVDA is still doing extremely well and FOMO still plays a role every time the stock bounces after a meaningful decline.”
Bloomberg, AP
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correction
An earlier version of this story incorrectly stated that Jensen Huang’s fortune grew by $72 billion on the day.