NVIDIA Silences AI Skeptics as It Blows Away the Bullish Estimates

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NVIDA soars by twice the value of Intel in one day.

NVIDIA Stock Surges 168% YTD

Skeptics of the AI bubble have been silenced for the moment. NVIDIA Corporation (NASDAQ:NVDA) blew away the bullish estimates and guided even higher, as server farms around the world who hope to participate in the rollout of AI software need to retool with NVIDA’s bleeding edge GPUs to handle the super high processing speed requirements.

Earnings estimates for NVDA were raised over 70%. The stock is now up 168% YTD, up 25% today and now has a market value of $945B.

China-Taiwan Conflict

It is important to note that Taiwan Semiconductor Manufacturing (NYSE:TSM) manufactures most of NVIDIA’s chips, leaving the rhetoric from China that they intend to make Taiwan part of China again an ever greater risk to the global market. The NDIVIA move is raising semiconductors in general with the SOXX ETF up 4% today, up 30% YTD. The QQQ is up 1.6% today and up 27% YTD.

Technology is once again seen, this time through AI, as a key source of margin growth through efficiencies of labor reduction and better customer acquisition and retention strategies. The possibility of the general economy slowing into a mild recession without a major drop in earnings is increasingly seen as a possibility, aided by the large weights of tech in the major Indexes.

The debt ceiling negotiations continue and the lack of progress has led Fitch to put the US AAA rating on negative watch, helping to drive bond yields to the highest since early March, which has lifted the US dollar index to above 104, also the highest since early March. Gold has fallen to below $1,950 on the strong dollar and energy is lower as well.

Interesting June

Besides tech, the rest of the market remains largely in their trading ranges, waiting for the debt ceiling resolution, which also has uncertainty regarding what will come if it’s resolved with major spending cuts.

Also today, the jobs numbers were stronger than forecast, which has led to forecasts for Fed cuts to be pushed into early 2024 and the likelihood for another Fed increase by July to 60%, with a pause in June increasingly being heard in Fed-speak.

June is going to be a very interesting month.

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