MICRO NODETimestamp: August 8, 2022

NVDA

NVIDIA

Gaming Revenue Crash

UNJUSTIFIED PANIC

GamingRate HikesGuidance CutCrypto Mining

The Catalyst

“The crash was triggered on August 8, 2022, when NVIDIA announced a significant revenue miss for the second quarter, reporting $6.7 billion against the expected $8.1 billion. This was primarily due to a substantial decline in gaming revenue, which fell by 44% year-over-year. The market was gripped by fears of a broader slowdown in the semiconductor industry, exacerbated by concerns over excess inventory and weakening demand in the consumer electronics sector. **Macro Context:** 10Y Treasury Yield: 2.77%”

The Aftermath

“The thesis shifted as realized data stabilized and liquidity conditions normalized, undermining the worst-case assumptions embedded at the lows. As forced sellers exhausted and expectations reset, NVDA repriced higher with improving risk appetite and better forward visibility.”

Company Profile

Fundamental Overview (Current)

About

Nvidia Corporation is an American multinational technology company incorporated in Delaware and based in Santa Clara, California. It designs graphics processing units (GPUs) for the gaming and professional markets, as well as system on a chip units (SoCs) for the mobile computing and automotive market.

Sector

TECHNOLOGY

Industry

SEMICONDUCTORS

Market Cap

$4.62T

P/E Ratio

46.99

Beta

2.31

Div Yield

0.02%

52W High

$212.18

52W Low

$86.6

Hindsight Engine

Normalization of Historical Volatility Clusters

Entry Delta

-40.9%

Recovery Alpha

+1594.9%

Reference Peak

$18.96

Pre-Panic High

Panic Floor

$11.21

Moment of Capitulation

Drawdown Magnitude

-40.9%

Peak-to-Trough Delta

Alpha from Bottom

+1,594.915%

Total Return Delta

Macro Environment

Economic Indicators at Time of Event

Fed Funds Rate

2.33%

Inflation

8.00%

Unemployment

3.60%

10Y Treasury

2.77%

2Y Treasury

3.21%

30Y Treasury

3.00%

CPI

296.17%

Earnings Catalyst

Quarterly Report Data

Q4 2022Reported Aug 24, 2022

Reported EPS

$0.05

Estimated EPS

$0.05

Surprise

+0.00

Surprise %

+2.2%

Anatomy of the Crash

Sentiment Breakdown & Strategic Pivot Points

Stage 01: The Fear

By October 14, 2022, the sentiment around NVIDIA was overwhelmingly negative. Headlines like 'NVIDIA Faces Unprecedented Challenges Amidst Semiconductor Slump' dominated the news. Analysts downgraded the stock, citing 'structural headwinds' and 'prolonged recovery periods,' with some predicting further declines. The prevailing narrative was that NVIDIA's growth story was over, and the stock was doomed to languish at depressed levels.

Stage 02: The Turnaround

The turnaround began when NVIDIA announced a strategic pivot towards data center growth and AI applications, which reassured investors about its long-term prospects. Additionally, a broader market rally in tech stocks helped lift sentiment. Investors realized that the panic was overdone, as NVIDIA's core strengths in AI and data centers remained intact, sparking a rapid recovery.

Stage 03: Opportunity

The NVIDIA panic of 2022 serves as a stark reminder that selling into panic can destroy wealth. Those who bought at the panic low of $11.21 would be up +1,593% today, illustrating the massive buying opportunity created by irrational market fears. This case underscores the importance of maintaining a long-term perspective and recognizing the intrinsic value of fundamentally strong companies during market turmoil.