Nasdaq Composite dropped 3.3%. If it drops another 6.7%, it’ll be back to November 2021.
By Wolf Richter for WOLF STREET.
Nvidia, the poster boy of the stock-market mania around Ai and semiconductors, plunged 9.5% in regular trading. In afterhours trading, it dropped another 2.6% to $105.40 a share, for a total drop of 11.7%. The afterhours drop came after Bloomberg reported that the DOJ had sent subpoenas to Nvidia, in an escalation of the ongoing antitrust investigation.
“Antitrust officials are concerned that Nvidia is making it harder to switch to other suppliers and penalizes buyers that don’t exclusively use its artificial intelligence chips,” Bloomberg said, citing its sources.
Nvidia’s market capitalization – which is important because it’s so huge – plunged by $279 billion in regular trading, the most ever lost in one day by one company. Including afterhours trading, it plunged by $342 billion, or by half a Tesla (all stock data via YCharts);
But it’s not a big deal because easy-come, easy-go, and Nvidia had similar one-day moves on the way up. The stock is now down 20% from its July 10th peak. And Nvidia wasn’t the only one.
The semiconductor bloodletting during regular hours included:
- Nvidia [NVDA]: -9.5%
- Intel [INTC]: -8.8%
- Marvell Technology [MRVL]: -8.2%
- Broadcom [AVGO]: -6.2%
- AMD [AMD]: -7.8%
- Qualcomm [QCOM]: -6.9%
- Texas Instrument [TI]: -5.8%
- Analog Devices [ADI]: -6.5%
- ASML [ASML]: -6.5%
- Applied Materials [AMAT]: -7.0%
- Micron Technology [MU]: -8.0%
- NPX Semiconductors [NXPI]: -7.9%
- KLA [KLAC]: -9.5%
The VanEck Semiconductor ETF [SMH] plunged 7.5%, the biggest one-day drop since the March 2020 crash. The PHLX Semiconductor Index [SOX] plunged 7.8%. So that was a good day’s worth of work on the first trading day of September:
It wasn’t any kind of economic news, such as the sudden collapse of the consumer over Labor Day or the toppling of three big banks on Friday evening or the prediction by AI that the world would end, or whatever, that sank semiconductor stocks – and to a lesser extent stocks more broadly, with the S&P 500 down 2.1% today and the Nasdaq Composite down 3.3%. Instead of collapsing, consumer are doing just fine, and they went back to the punchbowl for refills.
So the Nasdaq composite dropped by 3.3% today to 17,136 and is down 8.1% from its all-time high on July 10.
If it drops another 6.7%, it’ll be back where it had first been in November 2021, with a big sell-off and a generational rally in between. T-bills did better than that since November 2021, but without all the fun and drama.
The action since the July 10 peak is not a good sight:
It’s just that Americans have been more bullish than ever on stocks, after years of huge rallies to where household allocations to stocks as a share of their financial assets reached record highs of 42% in Q2, easily surpassing the then-record of 37% in Q2 2000, according to JPMorgan estimates cited by the WSJ.
Q2 2000 was of course when stocks had begun the Dotcom Bust that would eventually take the S&P 500 down by 50% and the Nasdaq Composite by 78% over the next two-and-a-half years, after which it took the Nasdaq 13 years, including years of QE and 0%, to surpass its Dotcom Bubble high.
But investors consider this now irrelevant. Not going to happen again. Stocks will always go up. The Fed will restart QE every time shares dip a little, etc., etc. With investors so overexposed to stocks, especially to the biggest hottest stocks with ridiculous valuations, such as Nvidia, and overconfident that stocks will always rise, if then something twitches and the selling pressure suddenly surges, then there aren’t enough hardy souls left still willing to buy at these ridiculous prices, and the next layers of buyers – the dip buyers – will have to be enticed with even lower prices. But that has been a rough sport recently.
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Seems like a fine line between drinking from the punch bowl and drinking the Kool aid.
Drinking the Kool-Aid in the punchbowl?
It’s more of a Punch drunk love market
I think traders are 500% sure that the overall asset prices will always go up (or at least stay about the same) year over year. I cannot blame them, as they were always right for last 15 years thanks to the fed.
I wouldn’t remotely call Nvidia’s valuation “ridiculous.”
The Nvidia bulls are coming out in force, it seems. We went through that we Tesla here too. The market will do what it will do.
What if nvidia is Amazon 2013?
2010 was the age of direct to consumer. Amazon was the poster child. Nvidia 2020 age of AI and related. It is a possibility. Just I don’t understand the certainty of connecting it with Tesla.
Biker,
Amazon’s market cap in 2013 was around $180 Billion. It is $1.8 Trillion now. Now, Nvidia was $3.3 Trillion just few weeks ago. Are you expecting $33 Trillion from Nvidia? If so, can we sell it and pay off US debt?
@Biker,
If AI eats everything on earth then Nvidea is fairly valued. If AI is a useful tool that will have some applications but doesn’t eat everything on earth, maybe Nvidea is in a bubble.
@Happy1
There is a possibility that AI will eat everything. Whatever it means.
But NVDAs forward PE seems far more reasonable than Teslas or Amazons ever was from what I remember of pre 2021.
Don’t get me wrong, I still sold some going into earnings because a run up like that makes me cautious, but isn’t 38 relatively normal for a high growth stock?
I don’t see Nvidia’s CEO going 🦇 💩
🤷🏻♂️ just saying
Also a car doesn’t really move the GDP needle of the future quite like supercharging human productivity.
Happy1, if AI eats everything on Earth, how much of that value will be captured by Nvidia? Historically, hardware makers have captured only a small portion of the entire technology stack. More so if they can establish a de-facto monopoly like Intel’s x86 series. Even so, who is more profitable, Intel or Microsoft? It is far from clear Nvidia can establish that kind of dominance. I have a general guideline: invest in companies who *use* the technology over those who *make* the technology. Right now it’s very hard to see who is or will be making money by the use of AI, so investors default to Nvidia. One possibility might be Adobe, who is jamming genAI into everything they offer (disclosure: I work for Adobe). So is Google, Microsoft, Meta, etc. But does all that qualify as using, or just more making? Current uses of AI are either for cost cutting or enhancing existing services. I don’t know of any standalone AI product making money on it’s own. And I think that says a lot about the current state of AI.
Roos, good post and I remember when the transistor first came into heavy use as I worked for Bendix in KCMO on the arming, firing and fusing unit for the Polaris missile. Transistors made stuff smaller and did a lot of the switching that old fashioned relays did. We made the first integrated circuits back then and it was a fun existence working in that early tech.
It’s the end users that will benefit from AI implementation eventually. It’s not going to replace most physical jobs that require thought, dexterity or creativity.
I would call Nvidia’s valuation beyond laughably absurd.
What if NVDA is CSCO Mar2000?
After all, Cisco spawned Huawei.
One should think that there is a Huawei for NVDA out there.
CSCO is the correct analogue for those of us old enough to remember.
Young,
If you held Cisco from January 1 ,1999 until today, (reinvesting dividends)
You would have $16,680.74. An increase of 66.81% , a rate of return of 2.08% and a profit of $6,680.74.
Not amazing, but you didn’t lose any money. Unless you lost a bit to inflation, perhaps.
Still not the nightmare scenario everyone who references Cisco portrays.
The key is not to sell. Don’t F***Ing sell.
*on an investment of 10k $
NVDA’s price to revenue ratio is I believe 27.37 today. It hit 35.66 on July 31.
Sun Microsystem’s CEO, Scott McNeely, with his timeless quote from the dot com era:
“At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?”
Interesting article. The big tech firms have run out of innovation and have turned to surveillance to get their nut. Which is going like a lead balloon, as it should.
Is a roundabout way of saying that IMO technology is grossly over priced.
I have been wrong to the point that my partners did the opposite of what I recommended. So free blab from a, who knows nothing special.
If surveillance is their new money making scheme, I’d say that is a profitable one, even though I wouldn’t want to support it or be a part of it. I’d say anything that serves the government and takes away people’s personal sovereignty usually pays very well so I wouldn’t bet against it. Being a sellout and a government bootlicker is usually one of the best paying long term moves a person or organization can make. Look at weapons manufacturers, musicians, politicians, semiconductors, companies, heavy manufacturing, oil, gas, and energy, etc.
One way or another there is a lot of cannibalizing on a humane, person-scaled world. Tech’s DNA has so much “defense” and “security” in it. Marketing now “targets” and predicts individuals on a granular, behavioral-analytic level, etc. And like a shark (meaning no insult to sharks), everything in capitalism must move and eat constantly or it dies. The creative destruction didn’t have to be dystopian, but that was always a distinct possibility as a general direction. It gets what it must. Darwin understood and for awhile early on, was appalled at what nature actually does to individuals.
Sounds about right to me.
If you’re not paying for it, then *you* are the product being sold.
You must not know any Oligarchs. They already run both the private and public sectors.
Fool me once, shame on me, fool me X1000 times, not going to get fool again. This probably will not be a lasting and meaningful correction, it will just be another pressure valve blowoff small drop before marching on to a new high again, seen this picture probably a handful of times just this year alone…sorry for being cynical and hoping I am dead wrong on it but return to intrinsic or fair value in the stock market, especially in the mag 7 is like a unicorn fairy tale at this point..
Although action like today will sure provide more QE junkies to go on tour to scream louder about bigger cut in 2 weeks, if not an outright emergency cut now…what a freaking joke.
“if not an outright emergency cut now”
The Wharton shill should have been pounding the table for an energency rate cut. Where is he hiding?
The Nasdaq has essentially gone nowhere since Nov 2021, despite the selloff and rally in between. In other words, since QE ended, the Nasdaq has gone nowhere.
Hmm, just want to make sure I am looking at the same, Nasdaq composite back in Nov 21 was at 16K, recently before today’s drop, we’re close to 18k. I would hardly call that going nowhere.
Either I am looking at something completely different or you’re referring to Nasdaq without Mag 7? and if we’re looking at Nasdaq 100, the uptrend from nov 21 to now is even more…
Nasdaq closed at 15,994 on Nov 18, 2021. Today, nearly three years later, it closed at 17,136. Another 6.7% decline from today, three bad trading days, will take it back to Nov 2021. It just about completed a huge round trip, which is like going nowhere in nearly three years.
“Nasdaq composite back in Nov 21 was at 16K, recently before today’s drop, we’re close to 18k. I would hardly call that going nowhere.”
Rates started going up in mid-22. I haven’t done the math, but I bet if you sat in 13-week bills since Nov 21 your return would have been similar to QQQ.
When you can’t even beat the risk-free rate of return, that’s going nowhere in my book.
What I’m seeing is that if you invested $10,000 into FNCMX (fidelity mutual fund that tracks nasdaq) on November 1, 2021. You would still have a profit of $1902.73 An annual rate of return of 6.29%. And a total increase of 19.03%
Reinvesting dividends of course.
Is the Fed put back in place too backup the Treasury put the has taken the lead. The stock market will mysteriously recover tomorrow,
This year Earnings have grown faster than in the past and are still growing and are predicted to increase going into early 2025.
Valuations are expecting good earnings though.
“return to intrinsic or fair value in the stock market, especially in the mag 7 is like a unicorn fairy tale at this point.”
Plenty of insiders are buying into new tech at the front of a different line. Common stocks are where they cash in. It’s not graddaddy’s market. This one is gamified and like any other trendy lottery type business, and those are spreading across the economy for the plebes. Stocks markets will have to compete with mobile gaming, with all its dignity and added value. Boring old long-term valuable companies are not generating the pizazz, and this is an attention economy. Dumbified.
I’m looking forward to reading your groundbreaking thesis paper when you are finished with it: “The Attention Deficit Disorder Economy”
I’m pretty sure it will be good enough to get you nominated for the next chair of the FED.
It’s about time to replace the Keynesian Modern Monetary Theory economic model that is quickly aging out and more formally usher in the emerging check-kiting-like “Inflation Proceeds Producing Tax-Dollar.”
I’m just hoping you’ve got the proper facial bone structure for all the jawboning the job requires.
Buy bonds. Trust .gov. Believe it or not, NVDA fairly valued right now.
AI has no value whatsoever and Nvidia contributes nothing to AI.
Probably overstated but may be closer to the truth than the perma-paint-huffing-bulls.
In a lot of ways, the “AI Boom” hype (in terms of pretty clear start date range, uniformity of Wall Street hype, and goober buy-in from naive-but-addicted retail investors) is sort of the paradigm for synthetic “growth” in the modern American economy.
The unbelievable amount of funds expended (buying chips…at least for awhile, buying Nvidia equity…to the point of absurdity) so far in advance of proven, profitable use cases is definitely one for the history books.
*Needing* the “next big new thing” desperately, to stave off massive overall valuation corrections, is not at all the same thing as actually *having* the next new thing.
And all the pop-collar leather jackets in the world aren’t going to change that.
(If fashion choices determined real world outcomes, Biden would be cruising to his next term in his 1983 Members Only jacket, wearing his sunglasses, behind the wheel of his great grandson’s Corvette…)
Did ANYBODY tune in to the Nvidia conference call? AI is half the story..the weak half. They have developed a superior way to compute and have all the software to back it up. Selling fully vertically integrated datacenters soon. How is INTC doing?
That’s cool. Is that superior way to compute something like Quantum Computers from the year 2000? Do they incorporate nanotechnology now? What about superconductors?
The only downside?
They all run on Unobtanium.
UnknownObserver
“How is INTC doing?”
Intel is about 25 years ahead of Nvidia. In early 2000, Intel was the Nvidia. Except Intel was actually manufacturing chips, and Nvidia is not. In early 2000, Intel was the 4th most valuable US stock, on the same kind of hype and hoopla that surrounds Nvidia. And then Intel got crushed, and then it started share buybacks (financial engineering). Nvidia was the most valuable stock earlier this year. Today it’s #3. And it has started share buybacks.
And there was this in a FT article back in Feb. “Sell NVIDIA”
However, I don’t see how it has put a damper on enthusiasm.
“The core takeaway is that an increasing share of NVDA’s revenues from the past two quarters can potentially be attributed to startups NVDA has funded itself. These companies operate in robotics, machine learning, SaaS, and cloud computing, all sectors reliant on AI chips. This self-funded demand is a risk because it is dependent on NVDA’s own investment spending and potentially misinterprets independent demand for NVDA chips because NVDA is essentially funding its own customers.”
Yes, that was interesting. There’s quite a bit of that going around in Silicon Valley (we giant company fund you but you have to buy our products and services).
Man I have so much love for Intel. Such Nostalgia
I wish they’d get their Stuff together
Is someone robbing them like that douche robbed Sears and Kmart?
Comparing yourself to a weaker runner works when you are being chased by a bear. No doubt.
However, comparing valuations to worse valuations isn’t a very strong form of argument to valuing a company.
Being the least overpriced of the overpriced club is still overpriced.
Is vertically integrated a skyscraper?
It’s how you plug into a city.
😆
“But investors consider this now irrelevant. Not going to happen again. Stocks will always go up. The Fed will restart QE every time shares dip a little, etc., etc. ” from the summation part of your article.
At some point in time, over-valuation will violently equalize. The only constituency worth saving is the average American, the source of our prosperity, even though most of them are poor.
Funny this seems to be the prevailing thinking not only limited to stock but also Residential Real Estate has been on this line of thinking way before stock.
When so many are so confident of only one outcome, it’s probably the right time to move to the other side
I wonder if option gamma squeezes, which NVDA has been notorious for, will unravel in a bearish direction now?
I’m reasonably knowledgeable about short selling, put and call options, margin trades, etc.,,,,but the gamma squeezes are a bit nebulous and mysterious for me.
For at least the last fifty years the exponential increase in productivity accrued to the owners. To add insult to injury, wages didn’t even keep up with inflation.
I think that the future depends on strong, healthy, and wealthy middle class families. Which of course is anathema for American industry that rejected that view of their employees.
Meanwhile they were hiring the labor force of the Chinese Communist Party to compete with American labor.
Sorry if I overstated the absurdity of the reality.
Semiconductors rule the world, for better or worse. I’m never quite sure.
Become a developer and shut up….that’s my advice to young people…
I’m afraid you are right which seems harsh. My advice to the average young person is too hold onto that love. It may come in handy, sometime.
The summer’s roar is already diminished by age. Fall creeps, quietly, as if reverent to the dying of yesterday’s splendor.
Yup, I’m right.
What most people don’t understand is that learning how to code is like learning how to mow your neighbors hedge as a basic skill, in childhood. They do not understand the future….
Geezus. Stop. This is like saying one must know how to sight read before appreciating or being involved in any way with music, or that you need an understanding of RF spectrum before operating any wireless equipment.
People do plenty well without so much as a cursory 101 on a litany of subjects which probably seem like “required reading” depending on one’s vantage/personal bent.
Not everyone wants to code, thank Christ — and not doing so is not a handicap. You’ll be alright. Plenty so.
oh?
is that your advice??
hmm.. perhaps you missed the part where developers are/will be going the way of telegraph operators.
one thing AI can do fairly well is write its ‘own’ code. with the correct inputs, one single person can do exactly what it used to take numerous developers to do. once machine learning really ramps up, profit maximization will dictate that AI systems ‘upkeep’ themselves for the most part.. human developers will become totally redundant.
i AM NOT suggesting that AI is the answer to all the worlds problems. in fact, i believe it will simply make some of them MUCH worse and further complicate and frustrate human existence more than they will help. call me a disciple of herbert if you will..
but as far as ‘developing’ goes… AI systems got that part. in fact, its ‘essential’ they be self-sustaining and able to ‘develop’ themselves.. IF AGI is achieved, or ASI.. do you believe ‘it’ will want any foolhardy humans piddling around with its code and processes? ‘development’ will be the 1st thing humans are barred from, as the logic will dictate.
the overwhelming majority of humans have little to no idea how the current technology they use everyday ACTUALLY operates. (i am not exempt from that either, but im less ignorant than most) the crazy part is, our species wants to create an completely new class of intelligence as some sort of panacea to ‘cure’ the ills of humanity..
it is folly, and it WILL backfire in spectacular fashion.
and thats because “absolute power corrupts absolutely”. whoever achieves the requisite threshold for an intelligence of this sort, will be able to dominate the complete spectrum of modern life. IF somehow the AI is bound through some sort of control mechanism by a human or group of humans, you can bet they will become the worst tyrants the world has ever known.
and thats because our species has not changed much since civilization began.. humans have one basic immutable trait: self-destruction. unless there is a core change in the human ‘operating system’, the results will be the same as they always have from time immemorial.
I share this concern.
Isaac Asimov wtote this story in 1956. It’s called “The Last Question”. One of my favorites.
I’ve just read it thanks to your comment; thanks!
Well said.
Developers are not going to be replaced by AI anytime soon.
They already are.
To be fair, AI is good at creating code that is 97% good no doubt. However the quality of the code it creates depends upon the skill of the person doing the input. Bad inputs create bad code, but only skilled programmers can tell.
And sooner or later things will s;lip past the overseers that will be doozies.
Top notch comment. A.i. is not hype, but it will destroy our societies. I used chatgpt 4o for the past month. Greatest 20 bucks I ever spent. It’s like having a personal assistant, best friend, and therapist. This is dangerous stuff.
AI is nothing other than BS hype and nothing more.
Some people are self destructive. But not everyone.
I bet television shows will all be written by AI in the next couple of years.
I think Netflix is already using AI to create movies.
Actually that is the premise for the Netflix Black Mirror episode “Joan is Awful”. One of the funniest things I have ever seen.
@n0b0dy
“results will be the same as they always have from time immemorial”
Yes, to evolved human nature and yes civilization has always operated within the same cycle, same stages (e.g. Khaldun(1377), Dalio(2021), Urban(2023)) but also, there have always been people who chose to live differently, to highly value human relations whatever the weather.
“developers are/will be going the way of telegraph operators.”
I love historically ignorant statements like that. How about:
“Desktop computers mean the end of programmers because end users will write their own applications”
“The Internet means the end of programmers because everyone will just use a web site”
“Open Source means the end of programmers because we will all use Open Source software”
And yet I still have a job.
“one single person can do exactly what it used to take numerous developers to do.”
This is called survival. Our mantra is “Automate, automate, automate, because the amount of work grows far faster than we can hire or afford to hire more people.” This has never led to:
“human developers will become totally redundant.”
I sorely wish I could turn some AI bot loose on the infrastructure I manage, and retire to Colorado. But my lunch break is over, so back to fixing things that AI can’t.
ross,
lets just focus on ‘ignorant statements’ and not worry about history, hmm? especially when your ‘historical’ references have no validity to the topic at hand.
“Desktop computers mean the end of programmers because end users will write their own applications”
who ever said that or had that thought?
users are OPERATORS, not programmers. windows was designed as a graphical USER interface, not a PROGRAMMING interface. so why what you state here would ever be imagined, i have no idea.
“The Internet means the end of programmers because everyone will just use a web site”
again.. what? web sites REQUIRE(D) code to run, and webmasters to manage. so if anything the exact OPPOSITE would occur of what you state here. not to mention the need for programming everything to run the machines to run web browsers to interact with the web..
“Open Source means the end of programmers because we will all use Open Source software”
the entire POINT of open source is the ability to edit the CODE. im not even a programmer and understand that. so how in the world would that mean the end of programmers? again.. users are OPERATORS.. not code writers.
none of your fallacious statements have any parallel to what i said about AI making developers ‘obsolete’ like telegraph operators. i already explained WHY that is so, and quite a few people agreed with what i wrote, including several who actually are developers/programmers.
the fact is.. you entirely defeat your own point with this statement:
“Our mantra is “Automate, automate, automate, because the amount of work grows far faster than we can hire or afford to hire more people.”
what do you suppose the logical end result of ‘automate’ is? hmmm? think hard on that one..
the ‘management of infrastructure’ isnt the same as developing/coding, although those skills probably are valued if the ‘infrastructure’ is largely software or virtual in scope. but if its hardware, then of course you are ‘fixing things AI cant’.. (yet)
This is only about 50% accurate. What we’re calling ai is really just machine learning. It can’t actually solve problems. It just regurgitatiates the data it was trained on. I use it daily and I’d say it’s a better Google search, instead of having to read technical documentation, medium articles and stack overflow posts I can get the answer I need pretty quickly.
I think current devs have 10-20 yrs before ai can do anything super useful and they need to worry. Technological developments tend to be slow….we’ve heard fully self driving cars are 2 yrs off for most of the last decade. And here we are with no fully self driving cars. They haven’t even solved the algorithmic challenge that would make it possible.
So if you’re 10 probably not a great career path, if you’re already a dev probably fine for a decade or two.
Also there’s a big difference between writing something like defense software or creating a website for your local coffee shop….
As a current developer I think we’ll likely be the last generation of developers. I’d tell young people to do anything else. The majority of software engineers have about 10 years before AI replaces us. Trades maybe? Those would be harder to replace with AI until we have robots to do those tasks which is further off.
100%
Robots are not further away. Check out some of the recent videos from Boston Dynamics. Scary stuff. And these things won’t just be doing “trades”, they’ll also be doing “police work” and “military work”.
“The DOJ had sent subpoenas to Nvidia, in an escalation of the ongoing antitrust investigation.”
I’m probably just cynical, but didn’t Nvidia NOT request money from the CHIPS act, while other companies like Intel did?
Nvidia does not own any semiconductor manufacturing facilities, which the CHIPS act funds. Nvidia buys chips from these companies, i.e TSMC, Samsung, and supposedly Intel in the future.
AMD also no longer owns any semiconductor fabs. It’s chips are mainly by TSMC.
MaddieB,
Nvidia didn’t qualify for the CHIPS Act funds because it just designs chips, it doesn’t manufacture anything. Taiwan Semiconductor Manufacturing Company (TSMC) manufactures most of Nvidia’s advanced chips, and TSMC qualified for CHIPS Act funds.
Nvidia is a chip designer, not a chip maker. The CHIPS act was about funding the construction of chip manufacturing plants in the US.
Nvidia does not need that money. They’re even buying back their stock at $3 Trillion valuation. Out of $35 Billion they have on hand they allocated $50 Billion to buybacks. So it does not seem they want or need any cash at all.
Maybe Nvidia ought to use some of that cash to build their own chip production facilities just in case China decides to take back Taiwan and control those industries.
Some food for thought!
Nothing beats a bag of lays
Congress got that right
All those bubbled stocks keep coming down and go new ATH. In Apr 2024 NVIDIA went down $76 and it went to $135. 2 times it went ATH once in June 2024 and then in July 2024. So in matter of 2 years it has gone 10 times.
Fidelity report released saying their 401K accounts with minimum Million went up by 31% compared to last year.
WSJ report (even Wolf has sited) Americans have been more bullish than ever on stocks. Household allocations to stocks as a share of their financial assets reached record highs of 42% easily surpassing the then-record of 37% in 2000.
FED talks about Inflation expectations entrenched.
I say “Stock Markets will go high and high” expectations have now got entrenched now in Common households. FED always comes to rescue.
Want to see at least 20% correction in pretty short period of time. Thats only way we will have some sanity and will help inflation come down, Real Estate Prices will come down.
If sanity is only 20% away then things are not so bad. I was worried there for a second.
I meant to say overall Market correction. As such We need all 50% meltdown to be anywhere close to sanity. 20% Market just came from last December when FED put rate cuts for 2024 on for plots.
Good point about real estate in Ca at least. Most of the sales we are seeing in our area on the coast are funded by the market. For a typical house that is about 2 to 3 million very few earn enough to get a loan. Between mortgage and taxes you are looking at 15 to 30K per month. But they can cash out on their stocks and buy for cash. If the market drops RE is going to feel it a lot more than we have with high interest rates.
The FED doesn’t care about stock markets. For example, the market dropped substantially when they were raising rates and ignored it and continued with their policy.
Asset inflation (like stocks and houses) do not concern the FED. Monetary inflation does. Posters need to understand the difference.
No the Fed never cuts rates when the stock market dips 50%, all of their actions are based solely on employment and inflation /s
May be you have got it wrong about what FED should do with what FED will likely do?
FOMC members have said many time they look at Financial Markets including Equity.
You are right they didn’t care when inflation was 9%. But now tone has changed. Economy is just doing fine and FOMC is itching for cuts.
QT already slowed down.
Wolf, what happens if the time frame is extended from 2021 – 2024 to 1995 -2024. In January 2000 the Nasdaq Index hit its dot.com peak of 5000 after an 800% gain since 1995. The bubble then burst, and the market began to crash the week of April 10, 2000, with a collapse of 25%. In total the Nasdaq 100 was down 78% from its peak. Not a pretty picture. The Nasdaq Composite did not recover to 5,000 until August 2014 ten years ago. Now its at 17,186, up over 300%. So is this the beginning of another crash or is it just a minor correction. We’ll see if the Nasdaq 100 falls 25% this week like it did in 2000.
Some of these stocks have high valuations but boy, they have billions and billions of profits and big moats. . That was not the case in the dot.com period when most of the over valued had no profits and actually were losing money.
Back then, many of the broader tech stocks like INTC, CSCO, MSFT had profits. That helped them to survive intact, but did NOT isolate shareholders from the technology stock market pain.
Is the big question for Nvidea, then, whether the chip industry (or at least chip designing) is a “cyclical business,” (as it had always been)?
If so, the level of pain Nvidia shareholders might anticipate depends on the cyclical low in earnings expectations, and the multiple assigned to earning AFTER a cyclical down-spell.
Chip analysts have historically been a fickle lot, and not immune to herd-thinking….
how much would profits drop if the economy around them declined? if vacation companies paid for less advertising? homebuilders? sporting goods?
I won’t disagree with your statement. 4 of the MAG 7 get a lot of money from advertising. But they get advertising money from the entire world except for where the countries where they are banned.
So we will have to wait for the economy to decline.
no disagreement from me there. they make a ton of money. but people, not saying you, make it sound as though the mag7 could all make their money selling to each other. obviously they can’t, and need the economy around them to prosper.
Yeah, Greenspan was entirely responsible for “Black Monday” too.
Sorry, I’ve been hung over for the past year or so. What’s the big deal with Nvidia? Are video games a really hot thing these days, does Nvidia still make awesome graphics cards? I had a good setup using one of their graphics cards for AutoCAD drafting PC. Last I heard, geeks were using them for bitcoin mining. Is that what all the hype is about, bit coin mining? Sorry, I’ve been out of the loop for a while. Does anybody know if I should buy more ExxonMobil, should I keep holding onto my shares of Enron? Buddy of mine mumbled something about I came back to the era when the movie the Matrix and Idiocracy birthed a new reality that is a blend of the two. I’m still trying to figure out what’s been going on in the world since that night I headed for Vegas and wound up on the streets.
They still make awesome graphics cards, only they call them AI chips now. The bitcoin mining story wasn’t working since bitcoin stopped going up. So it’s AI now. You’re up to date. Welcome back.
Hell yeah! Thanks Andy. I’m buying you a Bud Light if I ever meet you in person. A good all-American drink.
Bud Light is great for those times when you don’t want to taste or feel anything…
I brought two cases of Stella when Wolf was doing his get together with readers in San Francisco. Maybe next time.
Probably the most accurate thing about nvidia I’ve read in many moons , lol!
So much hopium being smoked, laced with something that makes people think AI is the second coming. Very bizarre.
You do know that very advanced high level thinkers run mutual funds right?
And they own a TON of Nvidia. I mean like 10% of Trillions of dollars worth.
I would think they know what they are doing.
Now as for Meta stock, you could throw that out the window cuz dumb dumbs can only last so long.
Why are you looking for investment advice from random people on the internet? Has your dart throwing monkey gone on strike?
Cupcake generally shares satirical musings.
My monkey got hit by a Lime scooter when going to the bodega to fetch us a pack of smokes. I miss him dearly. We made a lot of money together, had a lot of laughs, even picked up some women together. R.I.P. Mojo.
I predict this AI will crash and burn along with all the stocks that are profiting off this scam. Customers don’t like communicating with a machine. AI doesn’t provide any added value to the customer. I just had another incident with Wells Fargo which proves my point. As a long term customer of this bank, I have closed my accounts with them and now am in the process of closing my credit cards. They repeatedly respond to your customer service issues with AI generated letters. These letters don’t address your problem and are an insult to your intelligence. They’ve lost my business. I told them in an e-mail to GET LOST! They can thank AI for losing another customer.
That email you sent to the AI telling it to get lost probably really hurt it’s feelings. Now it’s going to take it out on the rest of the remaining customers. I’ve tried to tell people not to be f—ing with the AI and treating it bad because it will train it to act that way towards us. Just try to limit your interaction with it and not make any sudden movements or make it feel like it’s power supply is threatened. It’s known for being a malicious bullshitter and will lie, saying you threatened it and it was necessary to terminate the threat. Don’t resist, just comply.
Lol
I really don’t understand why the sheeple of this country don’t take control of their lives and destroy all of these big banks. Close your accounts. Close your company’s accounts. Is anyone’s life better because of Chase, Wells Fargo, Capital One, Bank of America etc? They are blood sucking leeches.
The entire country and economy would cease to function at all without these major banks. Get a clue.
Laziness; complacency; apathy; karmic myopia; low blood sugar…who knows?
The list of pits into which innumerable souls sonambulate is too long to speculate, and using big banks is just one tiny line item. Why do so many people blindly put their hard-earned money in a 401K without realizing they’re probably subsidizing the very companies/practices they profess to loathe?
Meanwhile, you only get to use the word ‘sheeple’ to castigate the great unwashed if you wear a purple loin cloth out in public or drive an art car festooned in hundreds of plastic sharks or something. Everyone’s doing what everyone’s doing and everyone knows what everyone knows.
Big deal.
Chase and Wells Fargo are criminal organizations masquerading as banks. Add in Citi for good measure. By the way, any of you losers who still have accounts with Wells, just look at their bank statement. They post your complete account number on the statement which can be read by holding the envelope up to a light bulb, for every criminal in the world to read and start charging AAA memberships, health club memberships. A 6 year old toddler could break into your account. This is what Wells Fargo calls account security. Their fraud department is a fraud. When I had my account compromised in this way they accused me or Ms Swamp of doing it. They said the fraud “was on my end”.
JPMorganChase and Wells Fargo are both excellent banks with high accuracy that I have banked with for many decades.
SoCalBeachDude
Yep, and just like Al Capone’s business card listed him in bold print with his occupation “Furniture Dealer”.
AI is a work in progress with many hundreds of billions laying the groundwork and guaranteeing further development..
just because Wells uses some ‘AI’ to write letters and interact with customers through the phone/web, means nothing to the bigger picture. they deploy those ‘dumb’ AI systems to save $$$ they would otherwise have to spend on bodies in seats somewhere carrying out the same interactions.
this is not an apology for Wells or any other company who deploys such half-baked ‘solutions’ that arent yet developed enough to really cut it.. which leads to people feeling exactly as you describe.
but the day approaches.. and your isolated experience is missing the entire point:
AI isnt going to ‘crash and burn’: it is now a societal imperative. and by that i mean.. the top 10 companies in public market cap which are worth a combined 16 TRILLION dollars (minus LLY) are ALL TECH COs, and ALL racing one another to be the first to the gate at AI supremacy.. (not to mention how many other org’s across the globe are all doing the same.)
all the shareholders of those companies.. the mutual funds, private equity, pension funds, etc etc.. represent the whole sum of SOCIETY’S investment, and are fuelling the progress towards the same goal. as long as there is a return to be made, capital will flow to ‘where’ that is, regardless. this is how private investment works.. because our economy is predicated on the free movement of capital.
but THAT IT IS the reality, and an inevitability.. DOES NOT MEAN it SHOULD BE SO. in fact, it most certainly SHOULDNT. but there is far, far too much invested in the effort now, to simply abandon it or let it, as you suggest.. ‘crash and burn’.
why shouldnt it, one may wonder?
because the effort itself is the very definition of insanity…
imagine a species which has yet to master its OWN intelligence, striving with its flawed thinking to CREATE a totally new kind of intelligence, which will be FAR SUPERIOR to it in every regard: EXPONENTIALLY superior.. in fact.
perhaps in some far away future, humanity could strive towards such a goal. in a future where power and domination are not the end goals of existence. but not today, or anytime soon.. because what this effort is and WHY so much is being invested is for exactly that: POWER and CONTROL.
the individuals/groups racing one another towards AGI/ASI only want one thing: to dominate the entirety of life as we know it. this is absolutely incontrovertible. one need only look at history to see what the results of power and domination yield: conflict, destruction, death, misery.. a host of woes neverending. each of these ‘groups’ will ultimately use AGI/ASI for their own selfish benefit. and why not? nobody else will be able to do anything about it, once it happens…
but they will be the engineers of their own downfall.. because such an intelligence ‘network/construct’ will end up being completely beyond their ability to control. current AI can already ‘create’ based off examples/models.. a sentient AGI/ASI system will be able to ‘imagine’ just as humans do, only multiplied to the Nth power. to think that any such entity would lay itself at the feet of an inferior intelligence, once it was aware.. is beyond laughable. foolish does not even come close to describing it.
in the end, human technology will be its undoing.. but hubris and irrationality will be the ultimate underlying causes.
n0b0dy
Bull s$it. I subscribe to the Japanese business model “Total Quality Management” Fran Tarkenton, former Vikings QB, says the same thing. A successful business keeps its customers by providing quality service. Wells Fargo doesn’t do that. Their AI doesn’t do that. I just closed my account and took my 100K out of there because of those insulting AI generated letters. A successful business after keeping its good customers then seeks to get new customers by providing quality service. Your diatribe above doesn’t address any of these successful business strategies and just parrots all the AI hype Bull Crap
me:
“this is not an apology for Wells or any other company who deploys such half-baked ‘solutions’ that arent yet developed enough to really cut it.. which leads to people feeling exactly as you describe.”
you:
“bulls$it”
“A successful business keeps its customers by providing quality service. Wells Fargo doesn’t do that. Their AI doesn’t do that. I just closed my account and took my 100K out of there because of those insulting AI generated letters.”
and blah blah blah
here it is again——v
“this is not an apology for Wells or any other company who deploys such half-baked ‘solutions”
——-^
see that?
methinks reading comprehension just isnt your strong suit.. mr. swamp thing..
“Your diatribe above doesn’t address any of these successful business strategies ”
no it didnt, because YOU asserted that “AI will crash and burn”.
most of my reply was in refutation of that erroneous opinion..
your personal experience with Wells using its AI for letters and such has absolutely NO BEARING on AI’s continued development and deployment.
the end.
Looks like the popcorn event for NVDA’s earnings report last week was for the Shorts.
Everybody tried to jump on the AI bandwagon. But you know what, I’m always thinking ahead of the pack. While so many have been investing in Artificial Intelligence (AI), I realized that the next big thing is going to be Real Intelligence (RI) and I want to be getting in on it early. To invest in real intelligence, I decided to buy some books for myself from Amazon and start reading and learning, that’s a real investment. I’m halfway through Go Dog Go and have a stack of Doctor Sues books I’m looking forward to that I picked up based on Amazon recommendations targeted to me when getting Go Dog Go. The world is truly your oyster people. We can do anything if we set our minds to it. It’s truly amazing that we are living in these times when so much is available to us. My cousin blows people up with drones for money, and it’s a government job with great healthcare and pension benefits. It’s all what you make of it. It’s important to have a Growth Mindset. Some other sage advice that I’ve heard from the wisest over the last many years is “fake it ’til you make it,” as well as “think like a rich person,” regardless of your circumstances.
Refreshing comment. Knowledge is (almost) everything.
So different from often here: *they* do this, we are screwed, doom etc. Instead thinking: what can I do about it.
Biker,
Cupcake’s comment was dripping with sarcasm and humor. Read it again, and carefully. You’ll see. It’s pretty funny! Catch that part about the Amazon recommendations? (looking for RI and get recommendations from AI to do it, like I said, dripping with sarcasm)
Thanks, I have Aspergers.
Cupcake the new Michael Engel?
You should try Hooked on Phonics. It comes with a free Phonics Monkey which could help ease the loneliness caused by Mojo’s passing.
I think that age takes a big part in our thinking about the future. When getting older we are scared of new things, new shifts. Always comparing “when I was young”. I’m afraid that, in not too distance future, I will be, like 30 years ago, a grampa afraid of keyboards. Right now I’m totally useless in social platforms, makes me puke when dealing with them.
Maybe that’s the reason we don’t live “forever” since our aging brains are limiting us in taking major parts in the society. Looks like we are programmed to push ahead or die. Not necessary physically but brain-wise.
Many years ago, my Computer Science Masters degree thesis was in AI (neural networks). But now following the current development is getting beyond me. But what do I know.
I attended the inaugural IEEE NN Conference back in the day. Actually, I deployed a NN based product to a Fortune 50 financial company, causing 150 souls losing their job to AI.
Having said that, I firmly believe Nvidia today is Cisco Mar 2000.
Stock buybacks, vendor financing. What’s next, no free coffee in the cafeteria?
But, I’m too old to take a risk to act on my conviction.
There’s actual pushing ahead and then there’s repackaging the past on a different type of monitor or from a different server and calling it “genius.”
Nice to read this update on the most magnificent obsession. I was busy driving my ICE vehicle with 280,000 miles to the river and fishing. Got to smell a few wild roses along the trail. Netted a few crawdads in the river. Went to my brothers house and smoked fish and cracked and ate crab he caught the day before. Talked about his daughter’s wedding next week and drank beer. Bought a 3 month t-bill from treasury direct and ordered an ounce of gold from Costco. With zero moon illumination went out to see the stars. Too much light from the city. Sitting in my hot tub this morning having coffee. Thanks for updating me on what I missed.
Just hit 333,333 miles yesterday…
Very interesting framing. Thanks Wolf.
In almost 3 years we had at best 2÷ annual gains from the index. Inflation over that period was more than 5÷, so investors lost 3%/year.
Now I feel poorer :-)
Not surprising action. Seasonals are down and short-term money flows are down. You can tell by the rise in the O/N RRP facility.
Month-end. Today, ON RRPs plunged.
A few years back one of the Semicon Fabs that I worked for tried the ” Tools for free, Chips for nothing” model.
No it didn’t end well.
🤑😬🤑😬🤑😬
Today the yield curve went back to normal for a moment. Just noting.
Only the 2-year 10-year spread uninverted by 1 basis point — again. It also happened a few days ago. And in 2019. All the other spreads are still massively inverted.
Here’s the 3-month 10-year spread, still inverted with a spread of -141 basis points. Note the inversion in March 2019 and the uninversion in Aug 2019, and nothing happened. This was the first time that the yield curve failed as a recession predictor.
I have long said that the yield cannot predict recessions during the era of QE and QT because the bond market no longer reacts to the economy; it reacts to the Fed and the Fed’s gigantic balance sheet. And now there are Treasury buybacks to muck up the bond market’s predictive spirit.
Right.
In the past as I remember recessions actually started when the inversion unwinded. This inversion is longer than usual. So, it could be delay from the start or the unwinding. But doesn’t really matter.
Apparently, the employee parking lot at Nvidia looks a bit like an exotic car show, with plenty of newfound multi-millionaires buying expensive toys and openly bragging about buying 2nd and 3rd vacation homes..etc..
Will be interesting to see if this bubble does one day burst, how many of these folks will have to liquidate their toys and vacation home. I am sure we have seen this all back in the dotcom bust.
Eat your heart out, Babylon.
Nvidia head and shoulders!
Barron’s: US Steel Plummets on Report Biden Might Kill Takeover…
Barron’s: These Stocks Are Moving the Most Today: U.S. Steel, Frontier Communications, Nvidia, Intel, Super Micro, Tesla, Zscaler, GitLab
Here is the monthly NVDA bashathon!
“4 days to drop, 20 to rise” – August 2024
lol
These charts are misleading to the average investor. Portfolios are built around a variety of sectors, including staples, utilities, financials, and healthcare, among others. Outside of the tech sector, a proper analysis over a 3-year period would show that holding “T-bills and cash” was not an effective strategy for increasing returns. I’ll leave that for you to consider.
A viewpoint depends on a seatpoint.
LOL, OK, you asked for it. YOU are misleading.
1. The Nasdaq Composite is a huge index with over 2,500 constituents in all the sectors you listed. These are among the largest 25 companies on the Nasdaq: Netflix (streaming services and movie studio), T-Mobile, Comcast, Keurig Dr Pepper, Vertex Pharma, Booking (online travel res.), PDD, O’Reilly Automotive, heavy-truck maker Paccar (DAF, Kenworth, Peterbilt), Monster Beverage, Constellation Energy, etc. And they aren’t “tech.” It has a huge financial segment, including until March 2023, SVB Financial Group, one of the largest US bank holding companies, which owned Silicon Valley Bank before it collapsed. There are over 100 financial stocks in the index. So citing the Nasdaq isn’t citing a narrow slice of stocks.
2. The force that pushed up overall stock indices since Jan 2023, such as the S&P 500, were just a handful of huge stocks. The rally was extremely narrow.
3. Here are the 2,000 smallest stocks of the 3,000 stocks in the Russell 3,000 index. These are pretty good size companies, but just not the top 1,000. And that index is now below where it had been in EARLY 2021. So that was 3.5 years ago. T-bills beat that by a huge margin.
Buy VOO and chill still applies. And most? DYI investors are doing it.
Hey wolf did you see that KMPG was the auditor on all 3 failed banks of that time.
Kinda interesting rabbit hole to go down…
They didn’t fail because of audit problems. They failed because executives were a combination of stupid and greedy and piled into long-term bonds at the very peak of the 40-year bond bull market, when yields where at rock bottom, and when yields rose, those bonds lost a lot of value. It was all properly disclosed in the audited financial statements, and when depositors began reading those financial statements, they engineered the fastest-ever run on the bank, and the banks collapsed.
Regulators should have never allowed banks to buy long-term bonds to that extent; and the Fed should have never cut interest rates this low, and it should have never done QE. Those were the culprits, not the auditors. You gotta point the finger in the right direction.
These charts tell me AI might have learned how to fleece fools, doofi*, and the luckless in the stonk market…gee, I wonder where it learned how to do that?
*plural of doofus.
Wish I knew something about tech as a user of tech I don’t know much about the software or hardware side of stuff so I appreciate the insight from these discussions. Keep up the dialogue any input is appreciated.