Nvidia stock moves higher in recovery from September volatility

Nvidia (NVDA) shares are moving higher in Monday's pre-market trading — holding onto gains into the day's market open — after the chip stock tumbled last week. Morning Brief co-hosts Seana Smith and Brad Smith examine Nvidia's recent stock performance and its growth contributions to the IT sector as it contends with September volatility.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Luke Carberry Mogan.

Video transcript

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All right, let's get to it, NVIDIA.

Those shares are rising here in pre market after seeing a 12% decline last week and it certainly was a pullback.

But ultimately, it's more in line with what we had seen in the broader market route as well.

So not even just insulated to technology.

And we were sitting here on set and looking at how the sell off was intensifying and saying, if this pours over from technology into other sectors including consumer staples, that's where you could see even more of that jitteriness and the volatility spike here.

But while we're talking about NVIDIA, it's also important to remember that a lot of the thesis hadn't really changed outside of just what the guidance looks like.

Guidance is gonna become more challenged as they go up against some tough growth comps.

And so that's something to remember.

But at the same time here, you know, and, and I'll end with this at the company level, NVIDIA was the largest contributor to revenue growth for the information technology sector during this quarter.

If the company were excluded the blended revenue growth rate year over year for it would fall to 7% from 11%.

Similarly.

So largest contributor to earnings growth for the sector without NVIDIA, the information technology sector would have seen earnings growth of 9.9%.

What was it actually?

Oh, yeah, 20.3%.

Yes.

And I think the big questions here going forward a lot of this on the heels of the most recent earnings report and the reaction that we saw thereafter.

So I think there's lots of questions about how much of this optimism and excitement has already been priced into the stock, given the massive mood that we've seen here to date over the past one and two years.

So again, lots of questions there and then what I found interesting was some of the commentary coming out of Wall Street here over the last several days since we did get that most recent earn.

And the note that caught my eye was the team over at Citi Scott Kroner at the team.

He leads the US Equities team and he was talking about the fact that they actually don't expect NVIDIA to carry on being a massive driver of returns for the S and P going forward and they're making an argument that their sense is that NVIDIA is becoming just another large cap growth stock.

So I think that then begs the question going back to what you were just saying, if we do see a significant slowdown in earnings growth here over the next several quarters and looking out beyond that, just what exactly that means for the broader market.

And then of course, we haven't even talked about the fact, the expectation of rate cuts and we saw that just being priced in, I think a little bit to his tech sector last week.

So as we move forward to get closer to the feds first decision or potentially first rate cut here this cycle for uh 1st, 1st cut here for rates this cycle.

I think there's lots of questions about whether or not we're going to see a rotation or an underperformance here of technology as, as more investors see maybe some opportunity in those names that haven't necessarily participated yet.