The chip maker's shares have tended to pop after the Federal Reserve cuts interest rates, judging by data stretching back to 1999.

As of 11:40 a.m. ET, Nvidia shares were up by 5.3%. But it wasn't just the Fed rate cut that had investors pouring into Nvidia stock today. CEO Jensen Huang also just spoke on stage with Salesforce CEO Marc Benioff at the Dreamforce annual technology ...

Last Tuesday Nvidia shed over $279 billion in value. It was the biggest one-day paper loss for a corporation in the history of the stock market. As a CNN report put it, “only 27 companies on the planet are worth as much as Nvidia lost in value on Tuesday.”

If the Fed does fail to achieve a “soft-landing,” Nvidia, Tesla and others can be viewed as a potential defensive play for investors.

Nvidia’s stock historically has made dramatic moves in the year after initial Fed interest-rate cuts, and it has outperformed the S&P 500 on average when looking at all rate cuts since the IPO.

The central bank's decision to slash borrowing costs by 50 basis points is easing concerns about the economy. That could lift the AI trade.

On Wednesday, the Federal Reserve trimmed interest rates aggressively and penciled in further rate cuts by the end of the year. It slashed the benchmark interest rate by a half-point to 4.75-5% for the first time since March 2020.