S&P 500 futures and Nasdaq 100 futures are higher ahead of the open, adding to gains in what’s been a tumultuous week.
There’s really only one thing to talk about these days. My social media feeds say so. The text I’m getting from normies who rarely message me about the market say so. And the Robinhood trading stats sure as hell say so: it’s Nvidia.
Retail traders have been nothing but consistent in their love for buying the dip in Nvidia during its leadership crisis. Wednesday, the only day this week in which the stock gained, was the least buoyant day for net purchases.
On Thursday, with Jensen Huang’s resignation, the chip company completely dominated trading activity on Robinhood. More money changed hands in Nvidia than the next six most-traded stocks combined.
Net buys were even more tilted toward the chip behemoth.
6,184 single stocks were traded on Robinhood Markets on Thursday, and net purchases of Nvidia were more than double the rest of those 6,183 stocks, combined!
Even if we strip out the stocks that were net sold on the session, leaving only names that were net purchased, Robinhood traders still bought more Nvidia than they did of everything else, in aggregate.
As a subsidiary of Robinhood, Sherwood Media is restricted from writing about any company in which Robinhood is or was a selling group member of the IPO during the regulatory "quiet period" for that company.
Relationchips
Jensen Huang was brought down by inappropriate relationships.
But the relationships built by the only CEO that Nvidia has ever had also played an important role in establishing the firm as the heart and brains of the AI trade.
Nvidia’s a chip designer, not a manufacturer. But Jensen was clearly focused on manufacturing as much demand from as many customers as possible. That’s what was behind the direct financial support for neoclouds and frontier labs, attempts to marshal hundreds of billions in capital to support AI infrastructure projects, and his staunch advocacy for chip sales to China.
A lot of the coverage on what could change for the company in a post-Jensen world have focused on how this demand might fray around the edges at a time when traders were already growing more skeptical about the staying power of debt-funded capex.
Interim CEO Colette Kress has reportedly been much cooler on the type of financing arrangements that Jensen was using to bolster weaker hands. At a deeper, more philosophical level, coming out of this crisis the company might be simply looking to play a little more defense than offense and ensure its own house is in order.
Maybe given the jitters surrounding the trade, a more narrowly-focused Nvidia might be exactly what the doctor ordered to have the stock perform better. On the other hand, perhaps a more insular Nvidia exacerbates the lean times for companies that have benefitted from being under its financial umbrella.
But let’s imagine that the core issue within the AI trade remains what it’s been for the past few years: demand outstripping supply. Jensen also helped on the supply side!
“Obviously we're incredibly good at managing our supply chain. We have great partners that we've worked with for 33 years,” he said almost a year ago during an earnings call.
I don’t think that beer and fried chicken with Samsung execs or soju and pork belly with SK Group bigwigs are the key reason why Nvidia has been able to secure supply, but I do think they spoke to a level of comfort and trust between parties that takes time to build.
Nvidia’s new leader might not have the cachet or confidence in the demand outlook to fully capitalize on a consistently robust pipeline. And suppliers might be a little more willing to diversify their allocations, too.
Multi-year commitments, both on demand and supply, might mean that a new CEO can be on cruise control for a while. It will certainly take time to disentangle out how much of Nvidia’s success is a function of Jensen the person versus the GPUs (and broader CUDA ecosystem) as a product.
Seen on Socials
Via JC Parets on X:
