Chip King Nvidia Recovers 6% After Second Worst Day Ever

The Nvidia course is picking up strongly today after one of the toughest blows in the history of the chip giant. Investors see the sale as an opportunity to buy, while the fear of a political brake on AI data centers is still blowing through the market.

The Nvidia share (NVDA) opened more than 5 percent higher today. That has risen further to an increase of 7.31 percent and then it has dropped back a bit.

At the time of writing, it is 5.34 percent up at $191.56. Yesterday, the price went down 9.24 percent, from 200 dollars to 181.60 dollars.

That was the lowest level since April 9. With today's upturn, about 60 percent of that loss has been recovered, accounting for about $270 billion in recovered market value.

Repair other chip shares as well. At the opening, around 600 billion dollars in market value was added for the sector. AMD and chip machine manufacturer Lam Research climbed more than 11 percent and the Dutch ASML is about 6 percent towards the end of the trading day.

The revival follows one day to quickly forget. Nvidia lost about $450 billion in market value yesterday. Measured in dollars, only the DeepSeek crash of January 2025 was even more painful.

The cause lies in Washington. In the midterms, the November 3 US midterm elections, the Democrats captured both Houses of Congress. Several candidates campaigned against data centers, mainly due to rising energy bills.

Senator Bernie Sanders then added fuel to the fire with a call for a “national moratorium on data centers, now.” By that he means a temporary halt to construction, and that touches Nvidia directly, because the company sells its chips to those data centers.

UBS estimates that 30 to 40 percent of the planned additional data center capacity in the US may be delayed until 2028. Texas, which accounts for around 27 percent of that capacity, is particularly worrying for investors.

Before yesterday's crash, Nvidia's share was already more than 20 percent below the record level at the beginning of this month. Investors had been doubting for weeks whether tech giants like Microsoft and Meta would recoup their AI billions. It is precisely these billions that make up Nvidia's turnover.

For the time being, that seems to be the case. A ban on AI or a nationwide construction freeze calls for new laws, and President Donald Trump can veto them. To break that veto, a two-thirds majority is needed, and the Democrats do not have one in either House.

In Texas, too, the tone sounds milder than during the campaign. Newly elected Governor Gina Hinojosa told media that data centers will remain welcome as long as there are rules.

“It's not that I hate data centers. I hate the way they abuse Texas,” Hinojosa said. According to her, the construction stop should only last until those rules are in place.

In addition, the share has become considerably cheaper. Nvidia costs about 15 times the profit that analysts expect for the coming year. That price-to-earnings ratio (P/E) shows how much an investor pays for every dollar of profit.

At 15, Nvidia is cheaper than the average S&P 500 company, which stands at around 18.5. It is the lowest level in at least five years, while analysts are raising their earnings expectations.

Just because bargain hunters are back doesn't mean the fear is gone. The VIX, Wall Street's anxiety gauge, shot up nearly 70 percent yesterday. Today, it has dropped by 11 percent again, but with that, the calm has not yet returned.

This afternoon, the US jobs report also came in a lot stronger than expected and therefore a rate hike next month seems almost certain.