To The Moon

Volatility continued for Nvidia stock on Thursday. The artificial intelligence (AI) leader's share ended the daily session down 6.7%, according to data from S&P Global Market Intelligence. And The shares dropped another 5% in morning trading on Friday.

After posting big gains Wednesday, Nvidia stock initially looked poised to see another day of gains thanks to strong demand indicators following the publication of Meta Platforms' Q2 results and guidance. But macroeconomic concerns took center stage for the broader stock market, and the highlighting of related risk factors drove big sell-offs for the chip specialist.

Nvidia stock has been in topsy-turvy mode lately

Nvidia's pullback today comes on the heels of even bigger gains on Wednesday. Microsoft issued encouraging capital expenditures and AI investment guidance with its recent quarterly report. AMD also published Q2 results that showed demand for data center processors was high.

Investors were also feeling bullish ahead of expectations that yesterday's Federal Reserve meeting would signal that an interest rate cut is coming in September. In response, Nvidia's market capitalization increased $330 billion on Wednesday -- the biggest-ever daily gain for a company.

The rally almost looked poised to continue Thursday. Encouraging capex guidance and commentary from Meta Platforms gave Nvidia stock a boost in pre-market and early daily trading, but the gains faded as an uptick in bearish sentiment for the overall stock market took hold.

While the Fed's July meeting signaled that the much-anticipated interest rate cut will likely arrive next month, some economists are seeing increased risk of recession due to a recent increase in jobless claims and other factors. The S&P 500, Nasdaq Composite, and Dow Jones indexes fell roughly 1.4%, 2.3, and 1.2%, respectively.

Nvidia has recorded the biggest daily jump in market value in the history of Wall Street.

The California-based chip maker on Wednesday added $330bn to its market capitalisation – blasting past the previous record it set in February with a $277bn single-day gain.

Shares of Nvidia soared nearly 13 percent, buoyed by expectations that demand for its chips will remain strong after Microsoft on Tuesday announced that AI-related capital spending in the 2024 fiscal year rose 60 percent to $69bn.

Nvidia’s latest stock rally takes its market cap to $2.88 trillion, making it the world’s third-most valuable company after Apple and Microsoft.

Nvidia, whose graphics processing units (GPUs) are integral to the development of AI, briefly became the world’s most valuable company in June after knocking Microsoft off the top spot with a market cap of $3.335 trillion.

Nvidia shares have risen more than 150 percent during the past year, more than any other major US company by far.

The company’s stellar run has also been marked by extreme volatility, with the latest rally coming just a day after shares dropped 7 percent, wiping $193bn off the company’s value.

Founded in 1993 with a focus on 3D graphics for gaming, Nvidia planted the seeds of its success when it began developing GPUs for other applications during the 2000s.

Buoyed by voracious demand from tech giants such as Microsoft, Meta and Google, the company now controls about 80 percent of the market for chips used in data centres needed to run AI models.

Nvidia went public in 1999, trading at $12 a share.

An investor who bought 100 shares of Nvidia at the time for $1,200 would today hold stock worth more than $5.6m.