Tech stocks slide as investors brace for Nvidia earnings and OpenAI verdict
Nvidia’s $5 trillion valuation faces scrutiny on Wednesday, while jurors begin deliberations in the Musk versus OpenAI case. Meanwhile, Cerebras’ IPO surge and SpaceX’s upcoming listing add to the sector’s turbulence.
Technology equities faced downward pressure on Monday morning as market participants positioned themselves ahead of two significant catalysts: Nvidia’s first-quarter earnings report and the commencement of jury deliberations in the lawsuit between Elon Musk and OpenAI. The decline underscores the caution prevailing among investors as they weigh the potential impact of corporate results against the outcome of a high-profile legal dispute involving key figures in the artificial intelligence sector.
Nvidia, valued at more than $5 trillion, is scheduled to release its quarterly results on Wednesday, 20 May. Options markets are currently pricing in a 6% move following the announcement, a figure that exceeds the semiconductor giant’s typical daily range over the prior quarter. Historical data indicates that while short-term gains around earnings have been modest, with a median gain of 0.3% after one day, the longer-term picture has been significantly stronger, with returns rising to 87.6% over a one-year holding period since 2016.
The market is also closely monitoring the legal proceedings between Musk and OpenAI, where jurors began deliberations on Monday following closing arguments delivered on Thursday. The trial has shed light on the internal dynamics of the private company, examining the relationships between Musk, OpenAI CEO Sam Altman, former president Greg Brockman, former chief technology officer Mira Murati, and board member Shivon Zilis. Lawyers for both sides have contested the credibility of the technology leaders, with arguments portraying Altman as engaging in self-dealing and Musk as attempting to exert control over artificial general intelligence.
Geopolitical developments have further influenced investor sentiment, particularly regarding Nvidia’s access to the Chinese market. CEO Jensen Huang travelled to China with US President Donald Trump, but Trump stated on Friday that Beijing is focusing on developing its own AI processors rather than permitting increased chip imports. This development adds to the competitive landscape Nvidia faces, which includes rising pressure from AMD, set to launch a competing rack-scale server system later this year, and major cloud providers like Amazon and Google, which are increasingly offering their own AI chips to third-party customers.
In broader market activity, Cerebras shares surged 68% in its initial public offering last Thursday, signalling strong demand for alternative AI processors. Additionally, SpaceX is preparing for its own public debut, with plans to implement a 5-for-1 stock split ahead of an expected Nasdaq listing in June. The rocket company informed shareholders that the fair market value per share has been adjusted to approximately $105.32 from $526.59, with the split expected to be completed by 22 May. Reuters reported that SpaceX plans to price its IPO as early as 11 June, with trading to begin on 12 June.
