CNBC’s Jim Cramer emphasizes the significance of upcoming Big Tech earnings in shaping the stock market’s future. The reports from Tesla, Meta, Microsoft, and Alphabet will reveal whether the recent tech sell-off will continue or abate. Despite NVIDIA’s 4% recovery on Monday, Cramer remains cautious about its offsetting the previous 10% drop. He advises investors to exercise prudence in their buying and selling decisions and acknowledges the potential for further market decline.
Mark Zuckerberg and Jensen Huang, the CEOs of Meta and Nvidia respectively, share a close friendship and a passion for technology. They have been known to exchange ideas and experiences regarding their businesses, with Zuckerberg praising Huang’s business acumen and contributions to the AI industry.
As the market rebounded on Monday, CNBC’s Jim Cramer observed positive stock performances but emphasized that Big Tech earnings reports this week will be crucial in determining the longevity of the rally. Chipmaker Nvidia experienced a significant rebound, rising 4%, following a 10% drop on Friday. However, Cramer cautioned that despite the recovery, Nvidia may not fully recover from its recent losses. Investors are closely monitoring the upcoming earnings reports from companies like Tesla, Meta Platforms, Microsoft, and Alphabet to gauge whether the tech sell-off will continue or subside.
Ahead of their upcoming earnings reports, Deutsche Bank’s chart reveals that all seven ‘Magnificent 7’ tech stocks are below their 2024 highs, despite most remaining positive year-to-date. Nvidia leads the way with a 54% YTD gain but has dipped nearly 20% from its peak. Meta and Alphabet have also seen gains this year, while Tesla remains the worst performer in the S&P 500 since July 2023.
Nvidia’s stock has skyrocketed since October 2022, but the stock price has recently experienced a 10% drop. The author believes that NVDA’s trajectory may mirror that of Tesla, which saw a sharp decline after its surge in 2021. This is due to the belief that markets are underestimating the incentive for the “Magnificent Seven” (Microsoft, Apple, Meta, Alphabet, Amazon, Tesla, Nvidia) to develop alternatives to NVDA products due to the increased competition. Consumers tend to become captive to certain brands or products, opting for shortcuts due to limited time and resources. However, corporations approach procurement differently. NVDA’s sales are primarily to corporations, and the mindset of corporate procurement personnel is vastly different from that of consumers. Corporations are less likely to become solely dependent on one supplier for critical components, leading to increased competition and risk for NVDA. The author believes that the “Magnificent Seven” will be working on developing their own AI chips to reduce reliance on NVDA and capture profit margins. The author has a bearish outlook on NVDA and suggests caution for investors, especially those who cannot afford to lose money.
Nvidia Corp and Advanced Micro Devices, Inc stocks witnessed a partial recovery on Monday following a significant selloff on Friday. Amidst concerns over the Federal Reserve’s interest rate hikes and geopolitical tensions, investors had grown wary of stocks that had previously benefited from the artificial intelligence boom. However, recent checks suggest that demand for AI-related products and services remains strong, with key players like Nvidia and AMD poised to benefit.
The technology-heavy Nasdaq Composite suffered its sixth straight session of losses on Friday, with Nvidia stock dropping 10%. The Philadelphia Semiconductor Index also fell, mirroring declines in Asian markets. Geopolitical unrest and a disappointing earnings report from ASML Holding contributed to the negative sentiment.
US equity markets have opened higher, but the gains are tempered by recent selling pressure. The Nasdaq Composite Index is currently up 0.45%, while Nvidia shares have rebounded 3.4% after a 10% drop on Friday.
US stock indices closed lower last week, with the Nasdaq Composite falling for its sixth consecutive session, marking its longest losing streak in over a year. The S&P 500 also experienced a downturn, while the Dow Jones Industrial Average rose slightly. The decline was driven by a drop in Nvidia, geopolitical tensions, and persistent inflation.
Nvidia and Japan’s National Institute of Advanced Industrial Science and Technology (AIST) are partnering to develop a hybrid supercomputer that will integrate quantum computing capabilities. The system, expected to be available in 2025, will support various applications, from drug discovery to logistics optimization. The collaboration is part of Japan’s efforts to enhance its quantum computing capabilities.
