The tech-heavy NASDAQ fell 1.2% yesterday, weighed down by some notable losses across the tech sector. Microsoft fell 2.5%, while AMD and Palantir dropped 3.3% and 1.0% respectively. Nvidia slid 1.4% and briefly broke below support around $180 before recovering a touch. The chip designer at the forefront of the development of Artificial General Intelligence (AGI) releases its earnings after tonight’s close.
Source: TN Trader
It’s probably not an exaggeration to say that these quarterly results, along with Nvidia’s forward guidance, could set the tone for the whole stock market as we go into year-end. When measured by market capitalisation, Nvidia alone is over 7% of the S&P 500. Investors appear more unsure over the outlook for AGI than at any time since this tech-led rally began in October 2022.
There are concerns that it may take a long time for the big tech hyperscalers to see a return on their AGI investments, with some analysts wondering if they ever will. At the same time, there are worries over the circularity of the investing environment.
Just yesterday, AI start-up Anthropic added to these when it announced a $30 billion investment in Microsoft, with Microsoft and Nvidia pledging investment back into Anthropic. This is on top of the concentration risk in stock market portfolios, with the ‘Magnificent Seven’ making up a highly significant share of investor exposure, as they account for around 35% of the market capitalisation of the ‘Magnificent Seven’.
Nvidia’s stock has fallen around 14% since the beginning of this month, so bulls will argue that there’s plenty of room to the upside should the company beat expectations later this evening. But a miss, or any downbeat guidance, could see Nvidia sell off further.
