Why Nvidia stock is gaining today

Nvidia stock is seeing high levels of volatility, but a recent report suggests the company still enjoys a big lead in AI processing.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Nvidia (NASDAQ: NVDA) stock is moving higher in Wednesday's trading despite volatility. The company's share price was up roughly 1% as of 2:15 p.m. ET, according to data from S&P Global Market Intelligence. Earlier in the day's session, it had been up as much as 4.9% and down as much as 3.6%.

Nvidia's stock gains today come on the heels of yesterday's big sell-offs triggered by macroeconomic fears. While rebound momentum could be a significant factor in the valuation increase, news that one of the company's rivals is failing to match its processing performance is also helping to push the stock higher.

Nvidia stock is seeing high levels of volatility

Nvidia stock got rocked yesterday as investors weighed underwhelming U.S. manufacturing data and concerns the Labor Department will release disappointing jobs numbers on Friday. While it now seems clear that the Federal Reserve will deliver a substantial interest rate cut at its meeting this month, investors are no longer confident it will provide enough of a bullish catalyst to send the market higher. Instead, concerns that the U.S. economy is heading for recession took center stage yesterday.

Nvidia stock fell 9.5% on Tuesday, shaving roughly $279 billion off its market capitalization. While many companies have seen much larger single-day declines on a percentage basis, the sell-off marked the largest pure-dollar valuation decline in market history.

The artificial intelligence (AI) leader's stock actually opened lower today due to news that the company had received notice that the Department of Justice was ramping up an investigation into whether its dominance in the graphics processing unit (GPU) market constituted a violation of antitrust laws. But news that its technologies continue to significantly outperform rival offerings helped power a recovery.

Nvidia still has a significant AI processing lead

The Financial Times published a report today stating that Huawei customers were facing challenges after moving away from Nvidia's hardware and software. According to the report, the Chinese tech giant is facing complaints about the performance of its chips and related software platforms.

The U.S. has established export restrictions that prevent Nvidia's most advanced processors from being exported to China. As a result, China's government and companies operating within the country have been looking for workarounds -- and chips designed by Huawei have emerged as a prominent alternative. But it looks like Huawei's chips are still significantly behind Nvidia's reliability and processing power when it comes to use cases for advanced AI applications.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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