Late-night market crash across the board! Nvidia's earnings report once again drags down the market! "Big Short" attack

Nvidia’s earnings again cause market collapse.

Last night, the US stock market saw a broad decline in major tech stocks, with the Nasdaq dropping over 2% intraday. Chip stocks also fell sharply, with Nvidia plunging over 5% and Broadcom dropping over 3%. Analysts pointed out that Nvidia’s better-than-expected earnings did not dispel concerns about an “AI bubble” nor ease investors’ worries that Nvidia’s moat is narrowing.

Meanwhile, “big short” Michael Burry’s latest article further fueled market fears. He warned that there are warning signs in Nvidia’s annual report. If demand for its AI chips weakens, Nvidia’s financial health could be severely impacted.

Nvidia Plunges

On February 26, Eastern Time, after the US stock market opened, Nvidia’s stock price tumbled sharply, dropping nearly 6% at one point. By the close, it fell 5.46% to $184.89. This caused all major tech stocks to fall across the board, with Broadcom down over 3%, TSMC ADR and Tesla down over 2%, Google and Amazon down over 1%. The Nasdaq once dropped over 2% intraday and ultimately closed down 1.18%.

Other chip stocks also came under pressure, with the Philadelphia Semiconductor Index falling over 3%, Applied Materials down nearly 5%, ASML ADR down over 4%, Micron Technology down over 3%, Western Digital and Seagate Technology close to 3%.

In news, Nvidia’s latest financial report showed that in fiscal Q4 2026, revenue reached $68.1 billion, a significant year-over-year increase of 73%, surpassing analyst expectations of $65.684 billion. Nvidia also forecasted first-quarter revenue between $76.44 billion and $79.56 billion, higher than the market estimate of $72.78 billion.

Bespoke statistics show this is Nvidia’s third consecutive decline after beating earnings expectations. Since August 2024, regardless of performance, Nvidia’s stock has opened lower the day after earnings releases.

Wall Street analysts noted that Nvidia’s outlook failed to dispel fears of an “AI bubble.”

Hargreaves Lansdown analysts said investors remain concerned about whether current AI spending can sustain growth in the coming years and whether Nvidia can maintain its dominance as AI shifts from training models to routine operations.

Conversely, sectors previously hit hard by AI, such as software, rebounded on Thursday, with stocks like S&P, IBM, and Visa surging, supporting the Dow to close slightly higher.

On February 25, Nvidia CEO Jensen Huang said in an interview that the market misjudged AI’s threat to software companies. He believes AI assistants will not replace these tools but will instead use them, which, although counterintuitive, will lead many software companies to develop and improve their products with AI assistants.

“Big Short” Latest Comments

Michael Burry, the well-known investor and persistent bear on tech stocks, published an article titled “Nvidia’s Growing Risks” on Thursday, further fueling market fears. He pointed out that Nvidia’s current procurement commitments total $95.2 billion, up from $16.1 billion a year ago, due to TSMC requiring longer-term contracts and prepayments. If AI demand falters, this could pose risks.

Burry stated that Nvidia’s efforts to meet expected chip demand put it in a “risky position,” and if the AI craze wanes, its financial situation could suffer a “catastrophic” blow.

He compared Nvidia’s “procurement commitments” to Cisco’s situation during the dot-com bubble burst.

Additionally, Burry noted that Nvidia’s high profit margins are partly due to its pricing power from high product demand, which could decline if demand weakens.

He warned, “Any recession would make Nvidia’s profits and balance sheet even more vulnerable, possibly catastrophic.”

Some analysts interpret that the US stock market is currently fighting widespread AI concerns. Investors are worried that since core clients (large cloud service providers) are spending heavily on AI-related capital expenditures, how Nvidia can sustain its astonishing growth in the future.

Fundstrat economist Hardika Singh said Nvidia rarely misses on revenue, net income, and guidance. However, the company’s failure to alleviate fears that its moat is narrowing, and the lack of a clear strategy to adapt to the evolving compute landscape and the AI wave that could disrupt industries from cybersecurity to food delivery and banking, is a concern.

(Source: Securities Times)