① Nvidia 1. CEO Jensen Huang and Federal Reserve Chairman Jerome Powell are key figures influencing the year-end performance of US stocks; 2. Nvidia's upcoming Q3 FY2026 earnings report is highly anticipated, with investors hoping to find evidence of a healthy AI ecosystem; 3. The Federal Reserve's interest rate cut decision also impacts artificial intelligence. It has a significant impact on corporate financing and stock market trends.
Artificial intelligence (AI) trading, and even the year-end performance of US stocks, may depend most on two people— Nvidia CEO Jensen Huang and Federal Reserve Chairman Jerome Powell. Investors will soon receive Nvidia's earnings report early Thursday morning Beijing time, and Huang will also speak on the earnings call.
Nvidia's "report card"
Whether the upcoming Q3 FY2026 earnings report can stabilize the " artificial intelligence ship" is crucial for all investors, who hope to find evidence that the AI ecosystem is moving in a healthy direction. (US Financial News) Ryan Lee, senior vice president of product and strategy at product provider Direxion, said the market will be closely watching Nvidia’s outlook for the next quarter.
At Nvidia's GTC conference in October, Jensen Huang revealed that the combined order value for AI core chips in 2025 and 2026 had reached $500 billion, with 30% already shipped. This has made some analysts even more "greedy," hoping that the trend in 2027 will be just as strong.
Because large-cap technology stocks are correlated with the market capitalization-weighted S&P 500. The 500 index has a significant impact, and Nvidia's report will also be important in other aspects. Louis Navellier, founder of Navellier & Associates, stated in his latest report that pressure on the "Big Seven" stocks caused "significant fluctuations in index prices," making Nvidia's earnings report "key to turning the tide."
Furthermore, Nvidia's comments may help alleviate Wall Street's concerns about the high valuations in the tech sector. Navellier stated that he is "not worried about valuations" and expects the sell-off to gradually subside "sooner or later."
James Demmert, chief investment officer at Main Street Research, commented, "The bubble is still inflating at a healthy pace, with no signs of it bursting anytime soon." He stated that despite valuations appearing expensive, top companies' stock prices are "below earnings growth rates," and "overall AI market sentiment is mildly bullish, not optimistic."
Lee points out that the market already knows just how massive AI spending is after hyperscale companies release their earnings reports. But Nvidia’s earnings report “will be a good thermometer” showing how the market leader “truly grasps the huge spending that these hyperscale companies have already reported.”
He also stated that Nvidia's earnings report is the "last major broad catalyst" before the Federal Open Market Committee (FOMC) meeting on December 10, and therefore will be a "good indicator" of market performance from Thanksgiving to early December.
Lee also emphasized that any comments Huang made regarding the depreciation of Nvidia chips would have a ripple effect on the market. If Huang reiterated that Nvidia's graphics processing units (GPUs) have a longer depreciation lifespan, investors might be more willing to invest in a wider range of hyperscale devices.
Federal Reserve Decision
Another key figure in the year-end performance of US stocks is undoubtedly Powell. It's clear that if the Federal Reserve doesn't cut interest rates as quickly as expected, artificial intelligence companies will find it more difficult to borrow money and fund their ambitious plans. This trend not only drags down more speculative AI stocks but also companies with better capital positions.
Lee explained that companies focused on growth "are always more sensitive to interest rate cuts, for better or worse."
“If interest rates remain high, it will be more difficult for some very large companies to continue borrowing,” he said. “That’s why investors are so focused on the Fed’s December meeting and what happens afterward.”
Lee stated that persistently high interest rates mean hyperscale enterprises will have to continue relying on cash flow from their core businesses. While debt financing "isn't always a bad thing," this dynamic could severely hamper hyperscale cloud computing if the market perceives continued demand for debt and there are no interest rate cuts. share.
He also attributed the recent sell-off to "hawkish comments" made by Federal Reserve officials ahead of the meeting.
Charlie Ripley, vice president of portfolio management at Allianz Investment Management, said he believes the market expects the final interest rate to reach 3% sometime next year. The focus now is on how quickly that will happen, hence the recent volatility in the stock market.
After two consecutive interest rate cuts, the current US federal benchmark interest rate is 3.75-4%.
“When the market no longer sees a December rate cut as a certainty, but rather as a coin toss, this will impact the stock market in the short term,” Ripley said, adding that overvaluation could be another reason for investors to withdraw.
(Article source: CLS)
