This holiday-shortened week saw a sharp recovery across US stock indices. This followed a difficult three weeks as questions were raised over the likely return on investment across the Artificial General Intelligence (AGI) trade. The turnaround began last Friday after the New York Federal Reserve’s John Williams indicated that he now favoured another cut in US interest rates before year-end.
This week, Fed members Christopher Waller and Mary Daly also sounded dovish. This represented a significant shift in Fed thinking. Let’s not forget that at the end of last month, Fed Chair Jerome Powell used his post-FOMC press conference to dampen December rate cut expectations. But this doesn’t suggest a terrible schism over at the central bank. Mr Williams wouldn’t have been so explicitly dovish without getting the thumbs up from the Fed Chair. Despite this, November hasn’t been good for market darling, Nvidia.
Despite a stellar set of third quarter earnings, the chip designer at the vanguard of the AGI trade fell from a record closing high of $210 at the end of last month to briefly break below $170 on Tuesday. That’s a high-low decline of 19%. The selloff was triggered by some high-profile selling. But there are also concerns that Nvidia finally has some serious competition.
Meta Platforms, an Nvidia customer, is talking to Alphabet’s Google about using its proprietary tensor processing units in Meta’s data centres. This looks like quite a specific deal, but it has certainly opened a breach in Nvidia’s near-monopoly on high-end chips.
Source: TN Trader
The share price has just experienced its worst run since late January, when Chinese startup DeepSeek launched a free AI assistant produced at a fraction of the cost of its US competition. When investors woke up to the implications of this, they sent Nvidia’s share price down 36% over the next six weeks. Could we be seeing something similar unfolding now?
