Nvidia’s stock fell 10% on no direct news due to a broader AI sell-off sparked by Super Micro Computer’s failure to report preliminary revenue. This caused Nvidia, a $2 trillion stock, to drop significantly. The recent sell-off indicates that much of the gains in AI stocks were driven by sentiment and FOMO on the AI boom. Nvidia had nearly doubled in value year to date, but a negative piece of news caused a sell-off, leading investors to lock in profits before a potential bubble burst.
The observation that triggered the sell-off may have been a nonevent, as Supermicro not reporting preliminary revenue could just mean weaker than expected quarterly results. While Nvidia is closely partnered with Supermicro, it is much larger and not as sensitive to its results. However, sentiment in the AI sector tends to move stocks in unison, and Nvidia has benefited from enthusiasm and high expectations for AI. The stock is falling alongside Supermicro, but it is uncertain if the sell-off is meaningful at this point.
Investors should keep an eye on Supermicro’s Q3 earnings report, which is due out after hours on April 30, to confirm or reverse the recent sell-off. It is also essential to consider that Nvidia was not among the 10 best stocks recommended by The Motley Fool Stock Advisor analyst team, which identified stocks with potential for monster returns in the coming years. The Stock Advisor service has significantly outperformed the S&P 500 since 2002, providing investors with a blueprint for success and regular stock recommendations.
Despite the recent sell-off, it is unclear if Nvidia’s stock is in trouble as a result of Supermicro’s performance. The volatility in AI stocks, driven by sentiment and FOMO, can lead to drastic changes in stock prices, as seen with both Nvidia and Supermicro. Investors should be cautious and wait for more information from Supermicro’s earnings report before making any investment decisions. The partnership between Nvidia and Supermicro may influence Nvidia’s stock price, but it remains to be seen how significant the impact will be in the long run.
