Federal Reserve President Jerome Powell said Friday that “the basic perspective and the changing risks can justify our adaptation of our policy attitude”.
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Markets move in gaps between reality and expectations. I expect that the gap that could occur as Nvidia reports the second quarter profits next Wednesday will carry markets more than Federal Reserve Jerome Powell said on Friday at Jackson Hole, Wyoming.
How yes? Investors grow up worry about how much companies are investing in artificial intelligence and how few of them get a repayment. Unless Nvidia hits investor expectations and increases guidance, its stock could sink. This decline will worsen by investors who would consider a bad reference as a sign that AI’s bubble explodes.
In Jackson Hole on Friday, Powell shifted his primary concern from rising inflation to a weakening of the job market. “Risk balance seems to be shifting,” Powell said, according to Journal Wall Street.
While working markets appear to be stable, the Fed perceives the dangers of the worst of the expected exposures of the labor market that will grow. “If these risks are implemented, they can do it quickly in the form of stronger higher redundancies and growing unemployment,” Powell said.
Read below for a closer look at why Nvidia’s profits are so moving and how investors will know if the designer AI will win and increase.
Why Nvidia is so important to the market
Nvidia’s quarterly profit reports have been moved since May 2023, when the designer chip issued the prediction of the increase in revenue heard around the world – prompted me to write my latest book, Brain rush.
Since then, the capitalization of the NVIDIA market has increased so much that the changes in the price of the company drives the S&P 500. Indeed, the capitalization of the NVIDIA stock market is worth 8% of the index value, according to Time.
In addition, the market market expects that Nvidia’s profit report will transfer markets more than Powell’s observations. This is due to the fact that the S&P 500 options invoice a 0.8 percentage point moving up or down after the Fed chair speech, while prices for August 28 – the first opportunity for investors to exchange NVIDIA report – result in 0.9 percentage or down. Time.
What do investors expect from Nvidia’s 2nd quarter report
In recent weeks, investors have become more cautious about investing in AI companies. For example, Palantir, whose shares culminated a few weeks ago at $ 190, recently lost 20% of its value despite excellent financial report in the second quarter, as I wrote on August 20th. Tower position.
One reason for the decline, which is mainly due to a brief assessment of the seller that the stock is 74% overpriced, is abysmal repayment from companies’ investments in AI.
Last September, my genetics was looking for me like a big dud. While people used Chatgpt to help them design emails and reports, there was no murder application – similar to what the iTunes store did for the iPod or computer sheet for personal computers, I wrote to The Boston.
This week, MIT reinforced this point with hard numbers.
“Despite $ 30B-$ 40B in investment in businesses in genetic AI. This report reveals an amazing result that 95% of organizations get zero performance,” according to a study by the MIT’s Nanda Institute presented by Pursuing. The study was based on 150 interviews with professionals, research of 350 employees and an analysis of 300 Public Developed AIs.
Will investors worry that this minimum repayment by AI will cause NVIDIA to provide a less suspensive growth prediction? If they do, Nvidia’s stock could fall and lead an important technological sale.
This brings us to the question of what Nvidia is likely to say next Wednesday, when it provides investors with the second quarter report. In May, the company foresees $ 45 billion revenue for the second quarter – $ 920 million under investor expectations, but 50% higher than last year, according to BUSINESS INVESTMENT.
One week before the last report, investors expect more than Nvidia. Specifically, analysts expect NVIDIA to publish revenue of $ 45.65 billion – an increase of 52.4% from last year and a 47% increase in profits per share to $ 1.00, according to Marketbeat.
Investors expect NVIDIA to predict Q3 2026 revenue of $ 52.5 billion, according to The stupid rich.
If NVIDIA exceeds these expectations and increases the guidance of revenue, its shares will probably increase. Otherwise, the fall of Nvidia could collapse on other AI stocks. In the meantime, I predict that the market reaction to the Nvidia report could be more intense than its response to what Powell said on Friday.
