ZINGER KEY POINTS
- Nvidia’s stock surged, boosting its market cap from $1.67T to $1.91T overnight.
- Nvidia’s earnings beat sparked a rally, significantly impacting S&P 500 values.
Nvidia Day has come and gone in a massive flourish of apprehension, excitement, relief and, ultimately fresh buying of the stock that takes the chipmaker’s market cap from $1.67 trillion to $1.91 trillion overnight.
The superlatives to describe this stock’s performance in the past couple of years are becoming jaded. So let’s do a quick recap of what’s been happening to Nvidia Corporation in just the past two days.
This week the stock fell 7% as investors’ apprehension ahead of Wednesday’s post-market results prompted some profit taking. Could Nvidia continue to surpass market expectations with its quarterly earnings, or would this be the one that failed them?
This was a sell-the-rumor, buy-the-fact moment as the scores came in above market forecasts. Having ended Wednesday’s session 2.9% lower at $674.72, after-hours trading on Wednesday, and pre-market trading on Thursday saw a 14% rally that took the shares above $700.
Big Tech, Big Moves
Let’s put some context behind these moves, courtesy of the Kobeissi Letter on X on Thursday.
• S&P 500 futures staged a 1.5% reversal after the market’s reaction to Nvidia earnings.
• Since 3pm ET on Wednesday, the S&P 500 added $600 billion of value.
• Nvidia itself was responsible for around $220 billion of that value being added.
“In other words, more than one-third of the S&P 500’s value added since 3pm came from Nvidia,” the analyst said.
He added: “Nvidia is now just 20% smaller than the entire combined value of Germany’s stock market. Tech giant is an understatement.”
Some of the other post- and pre-market moves added to the weight. Having fallen 0.6% on Wednesday, shares in $3 trillion market cap Microsoft Corporation are up 1.7% on Thursday, while $2.8 trillion market cap Apple Inc gained 0.4% on Wednesday and 0.6% on Thursday.
Big Tech, Big Influence
Given the above, what investors have to ask next is, can this market continue to rally without the tech stocks?
Such are their weightings and influence on the overall market — if they go down, the S&P 500 goes down, and investors lose confidence. This is where market correction possibilities lie.
If investors lose confidence in the market, they can quite easily become sellers of everything, and the influence is spread wider than just the U.S. markets.
“The post-close rally in U.S. tech stocks after Nvidia‘s earnings has fueled risk-on activity today. Japan’s Nikkei 225 index closed at record highs on Thursday with a 2.2% rally,” said Marc Chandler at Bannockburn Global Forex.
So, what could it take? A set of weak report from one of the Mega-techs? Perhaps Nvidia itself? Don’t count on it. The company has beaten the market in 12 out the last 13 quarters, according to Zacks.
Meanwhile, investors still love the stock. Only last week it was reported that hedge fund Tudor Investment increased its stake in Nvidia from 14,000 to 132,000 shares — giving it a total holding worth $100.6 million.
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Originally Posted February 22, 2024 – Nvidia Market Cap Nears $2 Trillion: Why ‘Tech Giant’ Has Become An Understatement
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