NVIDIA Strong Rebound, Focus on Tech Giants' Earnings Reports This Week

　　On Monday (April 22), NVIDIA staged a strong rebound, rising 4.35% to $795.18, with its market value soaring by $83 billion. All three major US stock indexes closed higher, with the Nasdaq rising 1.1%, the S&P 500 up 0.87%, and the Dow up 0.67%.

　　Image Source: tradingview

　　Most tech stocks performed well, with large-cap tech companies mostly rising. NVIDIA saw an increase of over 4%, while Google and Amazon rose by over 1%. Intel, Microsoft, Apple, and Meta saw smaller gains. However, Tesla fell by over 3%, marking its seventh consecutive trading day of decline, tying its longest continuous decline since its US IPO. Netflix also saw a slight decline.

NVIDIA's AI director, Jim Fan: enormous potential in AI field

　　Meta CEO Zuckerberg, in an interview a few days ago, stated that AGI (Artificial General Intelligence) would not be achieved in the short term, and another AI “winter” might follow. NVIDIA's AI Director, Jim Fan, holds a different opinion on this matter.

　　Image Source: wallstreet

　　Jim Fan believes that there won't be an AI “winter” now, indicating that he thinks AI development will not halt. Even though the development of large-scale language models like GPT-5 may slow down, there's still significant room for development in other AI fields, such as robotics. He also emphasized the importance of embodied intelligence in the physical world. In the future, AI systems like robots capable of working in real environments will be crucial drivers of economic value creation. Finally, he pointed out that large-scale language models are just a small part of the AI field, which is composed of many different technologies.

　　Musk's viewpoint aligns with Jim Fan's; he believes that by the end of next year, AI will surpass all humans. Additionally, he stated that the deployment and production volume of humanoid robots will exceed that of iPhones in the next 10 years.

Meta, Tesla, and others will release their earnings reports

　　This week, Microsoft, Google's parent company Alphabet, Meta, and Tesla will release their earnings reports. People will closely monitor the earnings reports of US tech giants and the development of AI. The performance of these companies will determine the trend of the entire earnings season.

　　The latest survey shows that despite concerns about the significant increase in US bond yields, strong corporate earnings will help lift the S&P 500 out of its recent slump. Nearly two-thirds of respondents expect corporate earnings to boost the US stock market, the highest level since October 2022.

　　Analysts from the International Derivatives Think Tank pointed out that after nearly two weeks of adjustment, US stock market valuations have fallen, while geopolitical tensions have eased, risk aversion has decreased, and gold prices have fallen. Combined with recent market focus on US stock market earnings reports and the Federal Reserve's steady stance, market concerns have eased, leading to a collective rebound in the three major US stock indexes and a gradual stabilization of US bonds. However, later this week, PCE data will be released, and speeches by policymakers may affect the extent of the rebound.

　　A research report from CITIC Securities stated that the current decline in the US stock market is not necessarily a bad thing because it can not only digest market sentiment that is excessively optimistic but also reduce trading risks, laying a foundation for future growth.

UBS downgrades ratings for the tech “six giants”

　　This week, earnings reports from major tech companies are forthcoming. UBS pointed out in a report released on Monday that Alphabet, Apple, Amazon, Meta, Microsoft, and NVIDIA, the six tech giants, are losing growth momentum, and their past profit momentum is weakening. Therefore, their stock ratings have been downgraded from “overweight” to “neutral”.

　　UBS analysts stated that the downgrade in ratings is due to the possibility that the profit performance of these companies may not be as good as other similar companies and is under pressure from cyclical factors, rather than due to their overvaluation or skepticism about artificial intelligence.

　　Last week, the sell-off in tech stocks led to the Nasdaq 100 index recording its largest weekly decline in 17 months, with the Nasdaq falling for the fourth consecutive week, the longest streak since December 2022. On Friday of last week, NVIDIA, considered a leader in the field of artificial intelligence, plunged by 10%, wiping out $212 billion in market value.

　　Until yesterday, the Nasdaq 100 index rose by 1.36% in intraday trading, and NVIDIA's stock price rebounded by nearly 5%, temporarily alleviating the market's downward trend.

　　UBS pointed out that other tech stocks did not join the post-pandemic rally in US stocks like large-cap tech companies. However, the current consensus forecast predicts that the earnings of these stocks will accelerate again. UBS estimates that the earnings per share growth of the top six tech companies will slow from 68% in the fourth quarter to 42% in the first quarter. By the end of the year, the growth of other tech stocks is expected to exceed that of large-cap tech companies.

　　Analysts from Deutsche Bank stated that investors remain cautious about the entire tech industry, reducing their investments in large-cap growth stocks and tech stocks. They will closely monitor Meta's earnings on Wednesday and those of Microsoft and Google's parent company Alphabet on Thursday.

　　Despite the potential disruption in the short term for tech stocks, UBS still holds a constructive view on US stocks and maintains its year-end target of 5400 points for the S&P 500, pointing out that there is still widespread positive fundamentals and strong economic support.

　　In addition, analysts from Goldman Sachs also warned that maintaining the upward momentum of tech stocks this week would require a very high performance threshold for this earnings season, which may not be easy to achieve.