Why Nvidia Stock Is on Track to Have Its Worst Quarter Since 2022

Mounting economic concerns have threatened to derail the AI trade, putting Nvidia (NVDA) stock on track to have its worst quarter since 2022.

Nvidia shares were down about 12.5% since the start of the quarter as of Wednesday’s close. That would represent the stock’s worst performance since the third quarter of 2022, when inflation was running at 8.2% and the Federal Reserve projected raising interest rates another 1.5 percentage points within the next year. (Ultimately, the central bank would lift rates even higher than forecast but, by the end of 2022, ChatGPT had sparked the AI craze that has turned Nvidia into one of the most important companies in the world.) 

The third quarter of 2024 is the only quarter since 2022’s bear market in which Nvidia stock has fallen, and that was a modest decline below 2%. Much of that loss came in July—as Wall Street worried about geopolitical tensions and overspending on AI infrastructure—and early August—when one of Wall Street’s favorite leveraged trades backfired, causing a flash crash of U.S. tech stocks.

Economic Uncertainty Trumps Strong AI Demand

The recent weakness in Nvidia’s shares comes amid a broader drawdown, driven by a pivot from momentum stocks and riskier assets to safe havens. Wall Street is increasingly antsy about the economic fallout of President Donald Trump’s unpredictable tariff policies. His on-again, off-again approach has created substantial uncertainty that investors worry will raise costs while discouraging business investment, hiring, and consumer spending. 

The economic outlook has weighed on Nvidia’s stock, but most of Wall Street agrees the company’s business is uniquely strong. Analysts across the board stood by their bullish ratings on the stock after digesting CEO Jensen Huang’s keynote address at the company’s annual GPU Technology Conference on Tuesday. Bank of America analysts on Tuesday called Nvidia’s product roadmap “unmatched,” while Citi analysts said the same day that they were “reassured in NVIDIA’s leadership which if anything seems to be expanding.”

But after two years of market leadership, high expectations have begun to catch up with Nvidia. The company blew past quarterly earnings expectations late last month, prompting a chorus of bullish comments from analysts. Nonetheless, its shares tumbled more than 8% the next day and have yet to recover from that drop.