NVIDIA's stock price plummeted by 5% during trading, triggering significant volatility in the technology sector. However, institutional investors were the primary sellers: Goldman Sachs data showed a pronounced bias toward selling, with overcrowded long positions exacerbating the selloff. Meanwhile, retail investors made their largest contrarian purchases since 2012, net buying $360 million worth of single stocks, including NVIDIA, within the first 80 minutes of trading, surpassing the total buy volume of the previous trading day.
Overnight $NVIDIA (NVDA.US)$ The sharp decline in stock prices triggered significant volatility in the technology sector. However, the main drivers of this sell-off were not retail investors—on the contrary, retail investors were buying at record levels against the trend, while institutional investors were the true sellers.
During Thursday's U.S. stock trading session, NVIDIA's share price experienced a dramatic reversal, plunging sharply to a 5% decline. This significant fluctuation directly weighed on the performance of major technology stocks.
Nevertheless, strong retail buying is providing potential market support. In the first 80 minutes after the market opened, net purchases by retail investors in single stocks, including NVIDIA, reached $360 million, surpassing the total buy volume from the previous trading day ($336 million) and demonstrating an exceptionally high risk appetite.
In stark contrast to retail investors' contrarian buying, Wall Street institutions dominated the selling side during this period of heightened volatility. The concentrated liquidation of previously crowded long positions in NVIDIA intensified downward pressure on the stock price.
Record-high retail buying on dips
According to data from Vanda Research, during NVIDIA’s price decline, the market witnessed the largest retail buying activity since 2012. In the first 80 minutes of trading, retail buying hit a historical record, with funds showing non-unidirectional flows, partially explaining the stock's sharp fluctuations.
Vanda Research noted that despite the initial weak price action, retail investors did not participate in the sell-off. Instead, they maintained continuous net buying throughout the trading session as prices fell.
Notably, retail investors' enthusiasm for buying was not limited to NVIDIA alone. Vanda Research observed that retail investor activity spread to other targets during Thursday's trading session, $Broadcom (AVGO.US)$ ， $iShares Expanded Tech-Software Sector ETF (IGV.US)$ and $iShares Semiconductor ETF (SOXX.US)$ with spillover buying evident in assets such as the aforementioned. If this momentum continues, the day could become one of the largest single-stock buying events by retail investors in months.
Institutional capital drives market sell-off
Behind the frenzy of retail buying, the primary force behind the sell-off was institutional investors. According to data from Goldman Sachs’ trading desk, overall trading activity was moderate (5/10), but the flow of funds leaned approximately 5% toward the sell side.
In terms of specific institutional types, traditional long-only funds (LOs) tended to sell, with their primary supply concentrated in macro products, information technology, consumer discretionary, and healthcare sectors, while showing buying interest in materials and communication services. Meanwhile, hedge funds (HFs) exhibited a more pronounced selling tendency, with the majority of their selling focused on macro products, followed by industrials and financials; their buying demand was mainly reflected in information technology (primarily short-covering in the software sector), consumer discretionary, and healthcare sectors.
Additionally, the market's extreme positioning also amplified the impact of this downturn. According to flow experts at Goldman Sachs, prior to this selloff, the market’s positioning in NVIDIA had reached an extreme level (at 8/10). Such a highly crowded position meant that when the trend reversed, market participants faced widespread losses.
Editor/Doris