“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.

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.

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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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