Retail buyers limit Nvidia stock rout

Detailed summary

NEW YORK, Nov 12 : 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 per cent 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 per cent 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…

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