3 Catalysts For the Fall

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Nvidia (NVDA) fell 7.1% this week and briefly entered correction territory after dropping from $211.34 to $178.91. The main events leading to NVIDIA’s fall included a general ‘risk-off’ in the market and comments from OpenAI adding pressure to AI infrastructure stocks.

In earnings news, NVIDIA’s main rival AMD forecast $9.6B in revenue next quarter and projects tens of billions from data centers by 2027.

OpenAI CEO comments on financing $1.4T spending commitments and seeking government backstop spooked AI investors.

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Shares of NVIDIA (Nasdaq: NVDA) dropped 7.1% this week, sinking sharply after hitting a high of $211.34 on Monday morning. Yet, even with the losses, NVIDIA shares had quickly plummeted into correction territory midday Friday. Shares sank to a low of $178.91 before rebounding to close the day at $188.15, a slight gain from Thursday’s close.

So, the big question facing NVIDIA investors is whether last week’s losses were the result of ‘market noise’ or were a signal of something larger and more troubling. Let’s dive into 3 catalysts that led to this week’s sell-off.

The Nasdaq Composite fell more than 3% last week. Tech stocks in particular were under pressure with the Technology Select Sector SPDR (NYSE: XLK) down 4.2% NVIDIA may have fallen 7.1%, but other semiconductor stocks also fell. Broadcom (Nasdaq: AVGO) fell 5.5% while AMD (Nasdaq: AMD) plunged 8.8%.

The biggest news among this group of companies at the forefront of producing AI accelerators was AMD’s earnings. Overall, the earnings were a positive piece of news for the industry. AMD forecast outlook of $9.6 billion next quarter, far ahead of Wall Street estimates of about $9.2 billion. Looking further out, AMD projects ‘tens of billions’ in revenue from their data center business from 2027. If you’re an ‘AI bull’ who believes the cycle is far from slowing down, AMD’s earnings generally supported that idea.

If you’re looking for reasons the broader market took a nose dive this week, it appeared to be a broader ‘risk-off.’ Most days, technology stocks fell, more defensive industries like Financials, Healthcare, and Consumer Staples rose. Macroeconomic headlines like consumer confidence plummeting amidst the continuing government shutdown also rattled markets.

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Another key reason technology stocks fell this week was OpenAI ‘spooking’ the market. Earlier in the week, comments from OpenAI CEO Sam Altman were widely shared across both social media and within money management circles. In the video (embedded in the X post below), you can see Altman get very defensive about a very reasonable question about the company’s ability to finance aggressive spending plans from venture capitalist Brad Gerstner.

Apparently, if you ask @sama how his $13 billion money-losing for profit not-for-profit can support $1.4 TRILLION of spend commitments, he gets very defensive and starts to attack non-existent short sellers.

I cannot wait for @OpenAI to be a public company. pic.twitter.com/DTPVJJf86x

— Compound248 💰 (@compound248) November 1, 2025

Another key OpenAI storyline was the Wall Street Journal reporting the company was seeking a government backstop on its data center investments. The comments were made by CFO Sarah Friar in an interview with the paper, and OpenAI tried walking them back as ‘poor wording.’ Yet the damage was done. Investors are quickly reversing course and viewing OpenAI as less of a catalyst in the AI space and more of a risk.

The company has been on a barnstorming PR tour for more than a month, announcing major deal after major deal and the longer the PR tour goes, the more ‘bubble talk’ grows.

There were other headlines this week that captured the media’s attention, such as Jensen Huang stating ‘China is going to win the AI race’ (another statement that has been walked back).

But beyond all the noise, the bottom line for NVIDIA investors is that the actual earnings news was very positive last week. Earlier, we detailed how AMD’s guidance for next quarter was very positive and the company also forecast massive scale into 2027.

Another bright spot was optics companies. Lumentum, Fabrinet, and Coherent all forecast extremely strong sales. That’s an important indicator for other AI infrastructure companies, as a surge in optics is just one more datapoint in a major acceleration in data center builds.

Overall, NVIDIA saw a big decline this week, but the actual news flow around the company was fairly positive this week, thanks to earnings. Their losses are mostly attributable to investors selling off risk this week and comments from OpenAI leading to added selling pressure on AI stocks.

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