Fed Euphoria Helps NAS100 Weather Underwhelming Nvidia Outlook Ahead of PCE Update
NAS100 Analysis
Nvidia once again blew past estimates with record top and bottom lines, driven by strong demand for its AI infrastructure, Furthermore, executives see new record sales in the current quarter, along with "several billion dollars" in Blackwell shipments – its next-gen AI platform - later in the year. [1]
But the results come at a period of AI skepticism and markets are in a show-me mode, as other AI darling have not been able to demonstrate return of investment. Nvidia's guidance plays into these fears, since the projected nearly 80% revenue growth may sound impressive, but would actually mark further slowdown and a departure from recent triple-digit expansions. The gross margin guidance also underwhelmed and the slower Blackwell rollout is another source of concern. Markets reacted negatively, as the stock dropped almost 7% after-hours.
NAS100 has rallied over the last two years on the back of Nvdia's surge and faced pressure after the results of the AI bellwether. However it regains its poise, due to the euphoria around the Fed. Chair Powell opened the door to a September pivot with his Jackson Hole speech [1] and market expect at least for cuts this year. However, Mr Powell did not provide insight around the size and pace and the optimism may be misplaced. The first test is due on Friday with the PCE inflation update. Further progress on disinflation will be helpful, but any upside surprises could douse optimism.
The rebound from the post-NFPs growth scare fades and the along with AI skepticism that Nvidia did not dispel, could send NAS100 back into correction territory (at around 18,700), but further losses towards and beyond the 200Days EMA (blue line) would need a negative PCE surprise and shift in Fed expectations.
The current rate path euphoria helps investors look past AI concerns and NAS100 remains above the 38.2% Fibonacci of the recent rebound. This creates scope for higher highs (19,951), but we are cautious at this stage for further strength that would challenge the record peak (20,788).
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
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