What Happened?
Shares of leading designer of graphics chips Nvidia (NASDAQ: NVDA) fell 3.7% in the afternoon session after a report that South Korea's SK Hynix is slowing its high-bandwidth memory (HBM) expansion rattled the AI-chip complex.
The headline sounds bearish for AI, but the underlying report is a margin story, not a demand story. SK Hynix is deliberately slowing its HBM4 ramp to redirect capacity into conventional DRAM, where shortages have pushed operating margins above HBM's. Korean analysts pegged the margin gap at more than 15 points. HBM is the memory bolted onto Nvidia's AI accelerators, so any "slowing HBM" signal instinctively sparks fears the AI build-out is cooling which is why the reflex was to sell. The more accurate read is that all three memory makers are running the market tight (Samsung flagged a 146% DRAM ASP jump in Q1, SK Hynix mid-60%), keeping pricing power with sellers.
The bigger driver appeared like profit-taking after a parabolic run. Micron rose ~300% since the start of the year, colliding with a hawkish rate shift: traders pricing 50bps of Fed hikes by December under new Chair Kevin Warsh, making debt-funded AI capex harder to justify at record valuations. The divergence confirmed it: memory names took the brunt (Micron −11%) while logic-heavy Nvidia fell only ~3.6%. Wedbush framed the drop as a buying opportunity with enterprise demand intact.
The shares closed the day at $200.16, down 4.1% from the previous close.
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What Is The Market Telling Us
Nvidia’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 18 days ago when the stock dropped 5.9% as macro pressure and an impending Senate hearing on China chip sales overwhelmed the impressive product updates earlier in the week.
For those that missed it, the Computex announcements on June 1 were substantive. Jensen Huang confirmed Vera Rubin (Blackwell's successor) is in full production, with deliveries beginning in Q3 2026 and all three major HBM4 memory suppliers (Samsung, SK Hynix, and Micron) qualified and shipping.
He also unveiled RTX Spark, a new AI PC processor developed with Microsoft for the Windows Copilot+ market, a direct move into Intel and AMD's territory. However, the same macro force weighing on all high-multiple tech, a stronger-than-expected May jobs report reducing the case for near-term Fed rate cuts, hit Nvidia hard during the session, given the stock prices most of its earnings years into the future.
Then reports revealed that Senator Elizabeth Warren invited Jensen Huang to testify before the Senate Banking Committee on June 11 about Nvidia's China business and export control compliance, a regulatory event now sitting directly in front of investors.
The fundamental Nvidia story is unchanged. Q2 revenue guidance stands at $91 billion, excluding any China data centre contribution. Hyperscalers have committed $119 billion in supply. The China business has been explicitly reset, H20 shipments were zero in Q1 versus $4.6 billion a year earlier, and Q2 guidance bakes in no Chinese data centre revenue, meaning it is now a cleared risk rather than a hidden one. The Senate hearing on June 11 was the immediate overhang: Warren's concern is whether Nvidia chips exported to China are being redirected to military applications, a charge the company denies. How Huang navigates that testimony will determine whether China policy risk becomes a structural discount or settles as background noise.
Nvidia is up 6.2% since the beginning of the year, but at $200.56 per share, it is still trading 14.9% below its 52-week high of $235.74 from May 2026. Investors who bought $1,000 worth of Nvidia’s shares 5 years ago would now be looking at an investment worth $10,524.
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