By Jim Edwards
Publication Date: 2025-11-21 17:06:00
Stock markets crashed globally yesterday and this morning, even though Nvidia, the world’s most valuable company, delivered blowout, above-expectations earnings. The company’s shares declined 3.15% yesterday. And the bloodletting continued for the red-hot semiconductor maker today: Nvidia was down another 3% by midmorning’s trading.
Still, the S&P 500 as a whole was flat by lunchtime, seemingly holding its own despite the storm in tech stocks. The Dow Jones Industrial Average was up.
Why?
It’s not just about a lot of negative headlines about AI.
The context here is that Nvidia stock is up more than 31% year to date—nearly three times the gain of the S&P as a whole. So a lot of this selling looks like people who are quite rationally deciding to cash in some of those gains while they can.
That perfectly understandable decision has a disproportionate impact: Because Nvidia and a handful of other tech stocks represent 40% of the valuation of the entire market, and 75% of its gains over the past three years, when Nvidia moves everyone else gets moved as well. Thus, it’s likely some traders see selling in Nvidia as a signal to sell the S&P 500 as a whole.
In the longer run, Wall Street remains pretty bullish about tech stocks. J.P. Morgan and Wedbush both published notes this morning arguing that AI is still in its early days, and that capex spending on AI—much of which ends up being spent on Nvidia products—has years to run.
The Fed factor
However, there is a…
