Why Nvidia stock is winning today

Nvidia (NVDA -1.61%) Shares are moving higher in Wednesday’s trading despite the volatility. The company’s stock price was up about 1 percent at 2:15 p.m. ET, according to data from S&P Global Market Intelligence. At the start of the day’s session, it rose 4.9% and fell as much as 3.6%.

Nvidia’s stock gains today follow yesterday’s big sell-off triggered by macroeconomic fears. While the recovery momentum could be a significant factor in the valuation boost, news that one of the company’s rivals is failing to match its processing performance is also helping the stock rise.

Nvidia shares are experiencing high levels of volatility

Nvidia shares were rocked yesterday as investors weighed disappointing US manufacturing data and fears that the Labor Department will release disappointing jobs numbers on Friday. While it now appears clear that the Federal Reserve will offer a substantial interest rate cut at its meeting this month, investors are no longer confident that it will provide enough of an optimistic catalyst to send the market higher. Instead, concerns that the US economy is headed for recession were in the spotlight yesterday.

Shares of Nvidia fell 9.5% on Tuesday, shaving about $279 billion from its market capitalization. While many companies have seen much larger single-day declines on a percentage basis, the sell-off marked the largest drop in pure dollar valuation in the market’s history.

Shares of the artificial intelligence (AI) leader actually opened lower today on news that the company received notice that the Justice Department is stepping up an investigation into whether its dominance of the graphics processing unit (GPU) market constituted a violation of the antitrust laws. . But news that its technologies continue to significantly outperform rival offerings helped spur a recovery.

Nvidia still has a significant AI processing advantage

The Financial Times published a report today stating that Huawei customers are facing challenges after moving away from Nvidia hardware and software. According to the report, the Chinese tech giant is facing complaints about the performance of its chips and related software platforms.

The US has established export restrictions that prevent the export of Nvidia’s most advanced processors to China. As a result, China’s government and companies operating in the country have been looking for alternative solutions — and chips designed by Huawei have emerged as a prominent alternative. But it seems Huawei’s chips are still significantly behind Nvidia’s reliability and processing power when it comes to using the shell for advanced AI applications.