What Happened?
Shares of leading designer of graphics chips Nvidia (NASDAQ: NVDA) fell 3.6% in the morning session after Oracle's disappointing earnings report sparked fears about stretched spending on artificial intelligence, leading to a broader sell-off in the sector.
The cloud-computing giant Oracle, a company that buys many of Nvidia's data center chips, reported quarterly revenue that missed analysts' expectations. At the same time, Oracle stunned markets by raising its capital spending outlook for fiscal 2026 by $15 billion to a total of $50 billion. This combination fueled concerns among investors that the massive spending on AI infrastructure might be unsustainable, stoking fears of an 'AI bubble.'
The negative sentiment spread across the tech landscape, affecting other AI-related companies. Shares of other chipmakers also fell as investors reassessed the short-term outlook for the entire AI sector.
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What Is The Market Telling Us
Nvidia’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 9 days ago when the stock gained 2.6% on the news that the company announced a $2 billion investment in chip-design software maker Synopsys as part of an expanded partnership to accelerate AI-driven engineering.
The investment gave Nvidia a 2.6% stake in Synopsys. The collaboration aimed to integrate Nvidia's computing platforms and artificial intelligence tools directly into Synopsys's software. This combination was expected to make the process of designing complex chips smarter and faster across various industries.
By embedding its technology throughout the chip creation process, Nvidia sought to enhance its key role in the AI market. The move was part of a broader effort to use its technology to speed up engineering and design workflows.
Nvidia is up 28.3% since the beginning of the year, but at $177.52 per share, it is still trading 14.3% below its 52-week high of $207.04 from October 2025. Investors who bought $1,000 worth of Nvidia’s shares 5 years ago would now be looking at an investment worth $13,641.
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