Insights

Why Nvidia Stock Fell Nearly 7% Today

What happened
Shares of Nvidia (NASDAQ: NVDA) were down 6.5% today as of noon ET. The sharp move down is in tandem with widespread pain in the stock market. The Nasdaq Composite Index was down 3.1%.  
Another wave of selling followed the Federal Reserve’s decision to raise interest rates by 0.5% last week. The Fed is attempting to cool off inflation, but fears are rising that the central bank is playing catch-up and its aggressive rate hikes could cause a recession.
Image source: Getty Images.

So what
There was no specific financial news coming from Nvidia to cause the stock to fall so far in a single day. However, last week news broke that the Securities and Exchange Commission (SEC) will collect a $5.5 million fine from the company. The fine relates to the SEC’s claim that Nvidia failed to fully disclose how much it was being affected by the cryptocurrency boom and bust in 2018 and 2019. Graphics processing units (GPUs) are used to mine some cryptocurrencies like Bitcoin and Ethereum.  
With a market cap of over $430 billion, $5.5 million in fines is nothing for Nvidia, but perhaps some anxiety that the SEC wields such power over publicly traded companies is contributing to the stock’s underperformance today. Additionally, some reports are emerging that demand for video game GPUs (the same ones often favored by crypto miners) is starting to wane. That follows reports from some analysts that consumer spending on devices is beginning to slow after two years of a pandemic-fueled shopping spree on all things consumer tech.  
Over 40% of Nvidia’s revenue is categorized under video gaming-related sales.  
Now what
Nvidia will report first-quarter financial results on May 25. During its last earnings update a couple of months ago, CEO Jensen Huang and company said to expect year-over-year revenue growth of 43%. After a steep sell-off in the last six months, Nvidia stock now trades for 54 times trailing-12-month free cash flow. This is no cheap stock, but given its torrid pace of growth and massive secular trends like artificial intelligence filling its sails, now could be a great time to buy for long-term investors (those who plan to hold for at least a few years).
Nicholas Rossolillo has positions in Bitcoin, Ethereum, and Nvidia. His clients may own the cryptocurrencies and companies mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Nvidia. The Motley Fool has a disclosure policy. –

What happened

Shares of Nvidia (NASDAQ: NVDA) were down 6.5% today as of noon ET. The sharp move down is in tandem with widespread pain in the stock market. The Nasdaq Composite Index was down 3.1%.  

Another wave of selling followed the Federal Reserve’s decision to raise interest rates by 0.5% last week. The Fed is attempting to cool off inflation, but fears are rising that the central bank is playing catch-up and its aggressive rate hikes could cause a recession.

Image source: Getty Images.

So what

There was no specific financial news coming from Nvidia to cause the stock to fall so far in a single day. However, last week news broke that the Securities and Exchange Commission (SEC) will collect a $5.5 million fine from the company. The fine relates to the SEC’s claim that Nvidia failed to fully disclose how much it was being affected by the cryptocurrency boom and bust in 2018 and 2019. Graphics processing units (GPUs) are used to mine some cryptocurrencies like Bitcoin and Ethereum.  

With a market cap of over $430 billion, $5.5 million in fines is nothing for Nvidia, but perhaps some anxiety that the SEC wields such power over publicly traded companies is contributing to the stock’s underperformance today. Additionally, some reports are emerging that demand for video game GPUs (the same ones often favored by crypto miners) is starting to wane. That follows reports from some analysts that consumer spending on devices is beginning to slow after two years of a pandemic-fueled shopping spree on all things consumer tech.  

Over 40% of Nvidia’s revenue is categorized under video gaming-related sales.  

Now what

Nvidia will report first-quarter financial results on May 25. During its last earnings update a couple of months ago, CEO Jensen Huang and company said to expect year-over-year revenue growth of 43%. After a steep sell-off in the last six months, Nvidia stock now trades for 54 times trailing-12-month free cash flow. This is no cheap stock, but given its torrid pace of growth and massive secular trends like artificial intelligence filling its sails, now could be a great time to buy for long-term investors (those who plan to hold for at least a few years).

Nicholas Rossolillo has positions in Bitcoin, Ethereum, and Nvidia. His clients may own the cryptocurrencies and companies mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Nvidia. The Motley Fool has a disclosure policy.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US & HK* Trades. Click Here!