Will Nvidia Revive or Break AI Sentiment?
Marcus Padley breaks down why tomorrow’s Nvidia results matter for market sentiment, the technical setup, and why staying in cash remains the safest call.
We’ve got Nvidia (NASDAQ: NVDA) results tomorrow morning at 8:20am and with AI sentiment teetering at the moment, it could send the market one way or the other.
On the positive front, Nvidia is already down 14.5% from the top, so expectations have already come down a little bit. The company usually communicates very efficiently with the market about what to expect and leaves a little bit in the tank so that the numbers are essentially better than expected. And with the whole market watching the Nvidia results, there’s a lot of uncertainty about how they will land. Either way, it’s going to clear up some uncertainty, which allows buyers to come back in.
At the moment there are a lot of negative expectations. With the glass half empty on AI, everyone will be looking at these results for all the negatives. So if it does survive them, and everyone is expecting negatives, there is a chance that AI sentiment will resurrect. And as I say, there shouldn’t be any real surprises in the numbers.
Strong Numbers, Uncertain Reaction
Whilst there has been a lot of criticism about circular deals, this will be a tremendous set of results, probably historic in terms of the numbers the biggest listed company in the world is producing. So it’s really a question of how the herd interprets it.
The share price has come back. We’re not in an overbought situation technically. On the charts, the RSI – the Relative Strength Index, where over 70 is overbought – was 73 and a bit on both the daily and weekly charts. It’s more significant on a weekly chart. It has come back on the daily chart to 42 and on the weekly chart to 53. So technically, it’s not as vulnerable as it was only two or three weeks ago during the Nvidia AI Super Bowl, which propelled the share price.
The bottom line is that the results will not surprise, but the market could take them either way.
A Big Risk for the Market
It is a big risk for the market. Even if the market likes the results or uses them as an excuse to bottom AI sentiment, it’s not something we want to get in front of while we are in cash. The trend is down. Expectations are extremely high. And whilst it might bottom things, it seems less likely than continuing the downtrend.
So we’re going to stay out of the market until this is out of the way. Even after Nvidia, there are other risks ahead. We’ve got jobs numbers at 12:30am on Friday morning – delayed US jobs numbers after the shutdowns ended. Everyone is expecting a big data dump from the US.
We’ve also got, at some point, inflation numbers in that data dump, as well as jobs numbers. And after that, we’ve got this tariff court case. If they rule tariffs are illegal, it’s going to kick off Twitter Armageddon from the White House and could create a lot of uncertainty.
The Trend Is Down Across Risk Assets
There are various risks ahead. The trend is still down. The technical setup on almost every risk on asset class at the moment – from Big Tech through to uranium stocks, lithium stocks, the S&P 500 – is that we’ve seen a top and we’re coming down. The VIX volatility index is spiking again. All these things suggest this is not a market you want to get involved in. And the Nvidia results tomorrow morning could cut either way.
No one in their right mind with this technical setup would bet on the results being good for the market, even though they could be.
Why We’re Comfortable Sitting in Cash
The good news is we’re in 100% cash in the MT20 portfolio, in our newsletter Strategy Portfolio, and in our Growth Portfolio. Since we cashed up in the Growth Portfolio, if we hadn’t done so, we’d be almost 14% worse off. The tech sector is down 14% from the top now in Australia.
So we’ll sleep tonight. Marcus Today investors will sleep tonight. And we’ll just keep making decisions every day, as we do. And we’ll make another one tomorrow morning.