Nvidia stock slips ahead of earnings: what happens if the AI darling misses
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Turbulence in technology stocks could intensify in the coming week as investors prepare for Nvidia Corp’s quarterly results, a report that has taken on outsize importance for markets given the company’s central position in the artificial intelligence rally.
The world’s most valuable company is scheduled to post its latest numbers on Wednesday, a release that comes amid growing unease about the sustainability of sky-high AI valuations despite expectations of yet another earnings beat.
Matt Orton, chief market strategist at Raymond James Investment Management, said Nvidia remains the “epicentre” of the AI build-out, making its results critical not only for the technology sector but for adjacent areas including industrials and utilities.
Orton told Reuters that the market is pricing in strong growth and optimistic commentary.
“If you don’t see the growth that I think the market is expecting around Nvidia or the positive commentary that we are likely to get from Nvidia going forward, I think you’re going to see more of a dent to those sorts of trades,” he said.
A market moved by a single stock
Nvidia stock has climbed nearly 1,000% since the launch of ChatGPT in November 2022, including a more than 40% gain so far this year that pushed its market value past $5 trillion last month.
That scale means any swing in the stock reverberates across benchmarks, with Nvidia now accounting for about 8% of the S&P 500 and roughly 10% of the Nasdaq 100.
Hedge fund positioning reflects the growing divide over how much further the rally can go.
A Bloomberg analysis of 13F filings from 909 funds shows sentiment split almost evenly: 161 firms increased their Nvidia holdings in the three months to September, while 160 cut back.
The broader uncertainty stems from AI companies that continue to raise and deploy capital at unprecedented levels but have yet to show monetisation models robust enough to justify those investments.
Adding to the scepticism, newly released regulatory filings show that billionaire Peter Thiel exited his entire Nvidia position during the July–September period.
Thiel Macro LLC sold all 537,742 Nvidia shares it held, a stake that had previously represented around 40% of the portfolio.
SoftBank, which has made a sweeping bet on OpenAI, also disclosed earlier this month that it sold its entire Nvidia stake — 32.1 million shares — for $5.83 billion.
Can the market afford a miss from Nvidia
Concerns are mounting that technology companies may be spending too aggressively on AI, with returns that could take years to emerge.
Several AI chief executives acknowledge the gap between investment and payoffs but remain confident in long-term outcomes.
Still, a miss by Nvidia or a guidance revision to the downside could have immediate consequences.
If the company falls short of expectations or signals caution, investors may reassess the pace of AI infrastructure expansion.
The result could be pressure across richly valued AI-linked stocks, a cohort that has enjoyed rapid appreciation — in part because of Nvidia’s own momentum.
Speculative sentiment is also embedded in the stock. Nvidia has consistently delivered numbers that push expectations higher.
That success raises the bar each quarter, leaving little tolerance for anything short of exceptional performance.
Investors broadly agree that Nvidia does not need to validate the existence of the AI boom — that has already been established — but the company does need to demonstrate that the boom is sustainable.
Without that reassurance, the narrative underpinning much of the market’s enthusiasm could weaken, leaving the sector vulnerable to a pullback at a moment when expectations are already stretched.
The post Nvidia stock slips ahead of earnings: what happens if the AI darling misses appeared first on Invezz
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Nvidia stock slips ahead of earnings: what happens if the AI darling misses
Share:
Turbulence in technology stocks could intensify in the coming week as investors prepare for Nvidia Corp’s quarterly results, a report that has taken on outsize importance for markets given the company’s central position in the artificial intelligence rally.
The world’s most valuable company is scheduled to post its latest numbers on Wednesday, a release that comes amid growing unease about the sustainability of sky-high AI valuations despite expectations of yet another earnings beat.
Matt Orton, chief market strategist at Raymond James Investment Management, said Nvidia remains the “epicentre” of the AI build-out, making its results critical not only for the technology sector but for adjacent areas including industrials and utilities.
Orton told Reuters that the market is pricing in strong growth and optimistic commentary.
“If you don’t see the growth that I think the market is expecting around Nvidia or the positive commentary that we are likely to get from Nvidia going forward, I think you’re going to see more of a dent to those sorts of trades,” he said.
A market moved by a single stock
Nvidia stock has climbed nearly 1,000% since the launch of ChatGPT in November 2022, including a more than 40% gain so far this year that pushed its market value past $5 trillion last month.
That scale means any swing in the stock reverberates across benchmarks, with Nvidia now accounting for about 8% of the S&P 500 and roughly 10% of the Nasdaq 100.
Hedge fund positioning reflects the growing divide over how much further the rally can go.
A Bloomberg analysis of 13F filings from 909 funds shows sentiment split almost evenly: 161 firms increased their Nvidia holdings in the three months to September, while 160 cut back.
The broader uncertainty stems from AI companies that continue to raise and deploy capital at unprecedented levels but have yet to show monetisation models robust enough to justify those investments.
Adding to the scepticism, newly released regulatory filings show that billionaire Peter Thiel exited his entire Nvidia position during the July–September period.
Thiel Macro LLC sold all 537,742 Nvidia shares it held, a stake that had previously represented around 40% of the portfolio.
SoftBank, which has made a sweeping bet on OpenAI, also disclosed earlier this month that it sold its entire Nvidia stake — 32.1 million shares — for $5.83 billion.
Can the market afford a miss from Nvidia
Concerns are mounting that technology companies may be spending too aggressively on AI, with returns that could take years to emerge.
Several AI chief executives acknowledge the gap between investment and payoffs but remain confident in long-term outcomes.
Still, a miss by Nvidia or a guidance revision to the downside could have immediate consequences.
If the company falls short of expectations or signals caution, investors may reassess the pace of AI infrastructure expansion.
The result could be pressure across richly valued AI-linked stocks, a cohort that has enjoyed rapid appreciation — in part because of Nvidia’s own momentum.
Speculative sentiment is also embedded in the stock. Nvidia has consistently delivered numbers that push expectations higher.
That success raises the bar each quarter, leaving little tolerance for anything short of exceptional performance.
Investors broadly agree that Nvidia does not need to validate the existence of the AI boom — that has already been established — but the company does need to demonstrate that the boom is sustainable.
Without that reassurance, the narrative underpinning much of the market’s enthusiasm could weaken, leaving the sector vulnerable to a pullback at a moment when expectations are already stretched.
The post Nvidia stock slips ahead of earnings: what happens if the AI darling misses appeared first on Invezz
In This News
Share:
In This News
Share:
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US stocks fall midday: Dow slides 1.2% as Nvidia, AI stocks weigh on sentiment