Nvidia Stock Moves: Overhyped or Overlooked?

As Nvidia (NVDA) stock continues to make headlines, investors and analysts alike are left wondering: is the news media overanalyzing Nvidia's daily stock moves, or are these fluctuations a genuine cause for concern? Jordan Klein, a trading desk analyst with Mizuho Securities, has criticized the relentless press coverage of Nvidia's stock price fluctuations as "myopic and silly." He argues that the constant attention to short-term movements can create a distorted perception of the company's performance and lead investors to overreact to minor fluctuations.



For instance, Nvidia's stock spiked to a record high of $153.13 on Jan. 7, 2025, following CEO Jensen Huang's keynote speech at CES 2025. However, the stock subsequently sold off in a classic "buy the rumor, sell the news" fashion, dropping 14% from its all-time high to $130.90 by Jan. 15, 2025. Klein points out that if the CES spike is excluded, the stock's decline would be more modest, around 5-6%, and not worth highlighting. He also notes that Nvidia's stock has been trading sideways around $135-$140 for three straight months, and the recent decline is not a significant departure from this range.



The constant focus on daily news tidbits is just "noise," according to Klein. What matters most for Nvidia stock is the hyperscale cloud customers' capex spending plans in the coming weeks. The news media's myopic focus on short-term stock movements can lead investors to make impulsive decisions based on minor fluctuations rather than long-term trends and fundamentals.

However, it is essential to consider that Nvidia's stock price movements may not be entirely overhyped. The company's growing influence in major indexes and exchange-traded funds (ETFs) could mean that a big move in its stock price would affect the broader market. Nvidia makes up around 5.5% of the S&P 500 and 6.5% of the Nasdaq 100, making it the third-heaviest company by weight in the S&P 500 and the second-heaviest in the Nasdaq 100. A significant movement in Nvidia's stock price could also affect many ETFs, such as semiconductor ETFs like the VanEck Semiconductor ETF (SMH) and iShares Semiconductor ETF (SOXX), which have heavy exposure to Nvidia.

In conclusion, while the news media's focus on daily Nvidia stock moves may be overhyped, it is essential to consider the broader implications of the company's significant weight in major indexes and ETFs. Investors should maintain a balanced perspective, considering both short-term fluctuations and long-term trends when making investment decisions. As Klein suggests, the news media should focus more on long-term trends and less on daily stock moves to provide a more accurate representation of Nvidia's performance and potential.