By Noel Randewich and Chuck Mikolajczak
NEW YORK, Nov 12 (Reuters) - Retail bought the Nvidia dip on Thursday in a big way, showing the AI trade is very much alive despite CEO Jensen Huang’s departure.
Nvidia was off 5% on Thursday afternoon following Huang’s resignation, which followed a report on Wednesday that the founder of the second most-valuable US-listed firm had an affair with a company executive who reported to him.
Thursday’s drop put Nvidia’s market-value decline for the week at $550 billion, with selling driven initially by questions about Huang’s relationship with a woman alleged to be a spy for Beijing. But buying the dip has been favored by investors ever since the end of the financial crisis in 2009, and Thursday was no different.
“Every time it works, it gets further reinforced,” said Mark Hackett, chief market strategist at Nationwide Financial in Downingtown, Pennsylvania. “It’s the kind of idiosyncratic behavior that you get in a healthy market.”
The rebound came after Nvidia tumbled as much as 14% at Thursday’s open, extending a torrent of selling over the past month. Vanda Research called Thursday's open the biggest-ever first-half-hour retail flow into Nvidia, estimated at $111 million.
"I said to somebody an hour ago in the office, this feels like the calmest day in markets in a few weeks, which is insane given the news since the last close,” said Jed Ellerbroek, portfolio manager at Argent Capital Management in St. Louis, Missouri. “I think that a lot of damage has been done to Nvidia stock over the last couple of weeks.”
Nvidia stock has lost nearly a third of its value in the five weeks since the Nasdaq Composite hit its most recent high, shedding more than $1 trillion in market value.
On Thursday, retail buyers flocked to popular investment platforms. At Fidelity Investments, customers had placed 394,818 buy orders for Nvidia by noon ET, compared with 80,088 sell orders.
Buy orders for Nvidia more than doubled the combined buy orders on Thursday for the nine other most-traded stocks on the platform, with runner-up Advanced Micro Devices showing 24,790 buy orders and third-placed Nebius amassing 24,519.
Sentiment was hardly unanimous. On Reddit's popular wallstreetbets trading forum, 60% of comments about Nvidia were negative. A wave of Wall Street downgrades this week hasn’t helped, with analysts at Baird Equity Research on Wednesday cutting the stock to neutral and slashing their price target by 60% to $200 a share, which is still far above Thursday’s afternoon price of $164.
“2027 data center forecasts are being delayed due to very recent lack of visibility, with supply issues mostly the reason for a potential slowdown but also due to potential demand softening. AI hyperscaler capex could slow to 40% growth or slightly less for 2027,” senior research analyst Tristan Gerra wrote.
Looking ahead, investors said the key issues for the market include what Nvidia executives say on next Tuesday’s quarterly earnings conference call and Anthropic’s IPO, which is expected to come to market later next week.
“The outlook for AI is going to be just fine,” said Hackett. He said he believes the Anthropic IPO is likely the more important event next week because, with Nvidia’s new management just having started, “It’s going to be hard for them to get a get out of jail free card out of one conference call.”
(Reporting by Noel Randewich and Chuck Mikolajczak, editing by Colin Barr and Nick Zieminski)
