Nvidia Down 22.6% in a Month as Hedge Funds Unwind the AI Trade

Nvidia stock has fallen 22.6% over the past month to $177.51 in premarket trading on November 11. The price includes a 5.1% premarket bounce from the November 10 close of $168.89. The decline forces a question across the semiconductor and AI infrastructure supply chain: did end demand break, or did crowded hedge fund positioning simply reverse?

The sell-off was unusually broad. Nishant Kumar, chief correspondent for hedge funds at Bloomberg News, said on the Odd Lots podcast: "In the last 16 years of covering hedge funds, I never saw a day like last week." Equity, macro, credit and stock-picking funds all lost money together. Kumar added: "This was like a perfect storm. Everyone failed together."

What did the funds lose?

Multi-strategy hedge funds split capital among many independent trading teams across stocks, bonds, currencies and commodities, all under tight risk limits. Investors pay these funds for steady returns when markets turn rough. That promise failed in October.

• Millennium fell 2.3% for October.
• Millennium held 12,157,614 Nvidia shares at midyear, tying it directly to the AI leader's slide.
• Vara, an AI-focused fund, lost 33% in October yet remained up for the year, showing how much money the AI trade made before it reversed.

Kumar said these funds are valued for "a track record of making money when the downturn hits. And they all failed together and they lost money."

Was the bounce mechanical?

Michael Ball, macro strategist at Bloomberg News, called the open on the Thursday after the election "a sucker punch because Wednesday you saw people rebuilding positions, you saw volume falling." He argued the recent bounce "was really the pain trade of everyone getting squeezed out of shorts and covering puts."

Ball said the AI trade "now has become bigger than the Anthropics and Nvidias." He described the recent sessions as "mechanical versus sort of AI narrative shifting." Short covering, where traders who sold borrowed shares buy them back, adds buying pressure. Dealer hedging by options market makers can amplify price swings. On November 10, Nvidia contracts expiring the next day traded 995,528 calls against 827,407 puts.

What is the bear case?

The governance story compounds the technical one. On Mad Money on November 10, Jim Cramer said Jensen Huang "admitted to a liaison with a woman who is an alleged Chinese spy." Huang was "still CEO, and he still has the support of NVIDIA's board of directors" as of those remarks. Cramer warned investors may have "to consider owning shares in a Jensen-less NVIDIA," while noting "a real bench at the company."

Ball also flagged a shift in the spending narrative: "October really saw that shift in the capex narrative where all of a sudden it wasn't a growth engine anymore and it was about financing, about free cash flow and again about this NIMBYism and electricity problems." Post-election concerns about the 2028 project pipeline added pressure on suppliers tied to power and cooling buildouts.

Do Nvidia's numbers support the bulls?

The fundamental picture from August remains strong. In its Q2 fiscal 2027 filing, Nvidia reported revenue of $96.221 billion, up 105.8% year over year. Data Center revenue rose 117% to $89.023 billion. Supply obligations grew to $279 billion, and Q3 guidance called for $108.0 billion, plus or minus 2%. On the earnings call, Huang said: "Our demand is much higher than" the roughly 70% fiscal 2028 growth that supply supports. The stock trades at about 23 times trailing earnings.

What decides the verdict?

The evidence points mostly to a positioning unwind across the broader AI trade, with an extra discount on Nvidia for key-person risk the market cannot yet price. Demand data from August showed customers asking for more than Nvidia could supply, but those figures predate October's capex worries.

Nvidia reports earnings on November 17. Ball named compute demand growth as the single most important metric to watch and said it remains on a strong S-curve. If guidance still shows demand exceeding supply, the mechanical squeeze explanation holds. A flattening demand curve would confirm the bear case and pressure the entire AI supply chain.