Despite a recent rebound in technology stocks, megacap names like Alphabet (GOOG, GOOGL), Amazon (AMZN), and Microsoft (MSFT) have all seen shares fall over the last month as investors question the staying power of artificial intelligence.
Shares of Google parent Alphabet have dropped 14%, while Amazon shares are off about 8%. Microsoft stock has fallen more than 7% as of Thursday’s close. But Nvidia earnings, due later this month, could be the next big catalyst for Big Tech and the AI trade overall.
Yahoo Finance’s Dan Howley reports:
The chip company’s performance could turn around the AI trade more than any hyperscaler. Unlike those software firms, revenue hasn’t been a problem for Nvidia. Still, if it falls short of Wall Street’s already sky-high expectations, it could bring the AI trend down with it.
Alphabet, Amazon, and Microsoft’s AI spending might be giving investors pause, but it’s helping pad Nvidia’s bottom line. The company’s Hopper AI chips are the most sought-after on the market, and the firm is set to begin ramping up production of its Blackwell line later this year.
The company controls 80% to 95% of the market for high-powered AI chips, according to Reuters. That means every time a company says it’s spending on AI capabilities, chances are it’s buying up, or at least using, Nvidia’s processors.
But Nvidia’s second quarter report also marks the start of what will be several quarters of difficult year-over-year revenue growth comparisons. The…
