BREAKING: NVIDIA recorded the largest one-day drop in history
NVIDIA closed down by 9.5% and erased $278 billion in market value on Tuesday
On Thursday paid subscribers received NVIDIA’s Fiscal Q2 2025 earnings analysis concluding:
“Perhaps if you are not a diversified long-term investor or you believe the company will be a market leader for years that could be a good moment to exit from the stock. Especially, because retail investors are now all-in.”
It turns out, the timing for writing this was perfect.
On Tuesday, after the long weekend in the US, NVIDIA ended the session down by 9.5% erasing a whopping $278 billion in market value. This is the biggest one-day decline in market cap on record. Previously, the largest was in February 2022 when Meta fell by $251 billion.
Since releasing its earnings on Wednesday, the chipmaker's stock has dropped by 14% and is down by 18% over the past week.
In effect, the semiconductor sector fell by 7.1%, marking the largest 1-day drop since the March 2020 COVID crash.
Finally, the major indices posted 2-3% declines with VIX spiking by 33%.
Interestingly, after the market close, news came out that NVIDIA has received a subpoena from the U.S. Department of Justice as the regulator seeks evidence that the chipmarker violated antitrust laws. Nvidia shares are down another 2.6% in the after-market hours trading following the news.
In summary, it's going to be a tough month for stocks as it used to be in the past.
At the same time, the sentiment among households is euphoric (see the 'chart of the week' below).
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Why subscribe?
The household sentiment is not euphoric. More and more Americans are in the stock market not because they want to be but because they feel they have little choice but to take on risk as their wage income stagnates or declines in real terms due to dollar weakness. Think of it like a desperate person buying a lottery ticket. They know that if the ticket is a loser they will be poor just like they would be if they didn't play, but a win will provide a large and discontinuous jump in their quality of life.