Late Night, Market-Wide Plunge! "Big Short" Raid!

Nvidia’s earnings report once again caused the market to crash.

Last night, in the U.S. stock market, major tech stocks all plummeted. The Nasdaq dropped more than 2% intraday, and chip stocks also collectively tumbled. Nvidia fell over 5%, and Broadcom dropped more than 3%. Analysts pointed out that Nvidia’s better-than-expected earnings did not dispel market concerns about an “AI bubble” nor ease investors’ worries that Nvidia’s competitive moat is narrowing.

Meanwhile, “big short” Michael Burry’s latest article further intensified market fears. He warned that there are warning signs in Nvidia’s annual report. If demand for its AI chips weakens, Nvidia’s financial health could be severely impacted.

Nvidia Plummets

On February 26, Eastern Time, after the U.S. stock market opened, Nvidia’s stock price sharply declined, dropping nearly 6% at one point. By the close, it fell 5.46% to $184.89. As a result, major tech stocks in the U.S. also suffered heavy losses: Broadcom fell over 3%, TSMC ADR and Tesla dropped more than 2%, Google and Amazon declined over 1%. The Nasdaq once dropped over 2% intraday but ultimately closed down 1.18%.

Other chip stocks also faced pressure, with the Philadelphia Semiconductor Index falling over 3%, Applied Materials dropping nearly 5%, ASML ADR down over 4%, Micron Technology down over 3%, Western Digital and Seagate Technology close to 3%.

On the news front, Nvidia’s latest financial report showed that in fiscal Q4 2026, revenue reached $68.1 billion, a significant year-over-year increase of 73%, surpassing analyst expectations of $65.684 billion. Nvidia also forecasted first-quarter revenue between $76.44 billion and $79.56 billion, higher than the market estimate of $72.78 billion.

Bespoke statistics show that this is the third consecutive time Nvidia has declined after releasing earnings that beat expectations. Since August 2024, regardless of performance, Nvidia’s stock price has opened lower the day after earnings.

Wall Street analysts pointed out that Nvidia’s outlook failed to dispel concerns about an “AI bubble.”

Hargreaves Lansdown analysts said investors are still worried about whether “current AI spending can sustain growth in the coming years” and whether Nvidia can maintain its dominance as AI shifts from training models to routine operations.

In contrast, sectors previously hit hard by “AI shocks,” such as software, rebounded on Thursday. Stocks like S&P, IBM, and Visa surged, supporting the Dow to close slightly higher.

On the news front, on February 25, local time, Nvidia CEO Jensen Huang said in an interview that the market misjudged AI’s threat to software companies. He believes AI assistants will not replace these software tools but will instead use them, which may seem “counterintuitive.” Many software companies will use AI assistants to develop software and improve efficiency.

“Big Short” Latest Comments

Michael Burry, the well-known investor and persistent bear on tech stocks, published an article titled “Nvidia’s Growing Risks” on Thursday, further fueling market fears. He pointed out that Nvidia’s current procurement commitments amount to $95.2 billion, up from only $16.1 billion a year ago, mainly because TSMC requires longer-term contracts and prepayments. If AI demand falters, this could pose risks.

Burry stated that Nvidia’s efforts to meet its chip demand commitments put it in a “risky position,” and if the AI boom weakens, its financial situation could suffer a “catastrophic” blow.

He compared Nvidia’s “procurement commitments” to Cisco’s situation during the dot-com bubble burst.

Additionally, Burry mentioned that Nvidia’s high profit margins are partly due to its pricing power from high product demand. If demand diminishes, these margins could decline.

He warned, “Any recession will make Nvidia’s profits and balance sheet even more severe, possibly catastrophic.”

Some analysts interpret that the current U.S. stock market is fighting widespread AI concerns. What worries investors most is that core clients—large cloud service providers—are spending most of their cash flow on AI-related capital expenditures. How Nvidia will sustain its incredible growth in the future remains uncertain.

Fundstrat’s chief economist Hardika Singh said Nvidia almost never misses on revenue, net profit, and guidance. However, the company’s failure to ease investor worries about its narrowing moat and the lack of a clear strategy to respond to the ongoing evolution of computing power and the AI wave that could disrupt various industries—from cybersecurity and food delivery to banking—remains a concern.