Katy Perry's 2010 hit, Firework, starts with "do you ever feel like a plastic bag, drifting through the wind" - Tech, semiconductors especially and including Nvidia, have certainly felt like that for a number of months after the Euphoric April-May rally. While there have been many bouts of questioning the monetization of AI capex, the latest round seems particularly persistent. And no, there is no doubting the transformative nature of the tech - just the economics of it.
While the AI led transformation is real, the market's transformation from its current funk, will be decided post market today, when NVDA reports. Consensus is looking at a double on EPS (range $2.08-2.13) and Revenues (c$92bn). While a solid report is almost a given, more critical will be the guidance and a read into the entire AI ecosystem's prospects. AND even more importantly, if this earnings report cannot reverse tech's underperformance, then one has to question the broader market trend too.
As Katy Perry sang, "you just gotta ignite the light...cause baby you are a firework..." Will NVDA ignite the market today?
NVDA - Stuck in a Range
source: Trading View
Semis - Underperforming The Market..
source: Trading View