What Nvidia says about AI chip demand could matter for more than just the tech trade

Artificial intelligence enthusiasm has spread throughout the stock market.

Nvidia’s ( NVDA ) earnings call Wednesday night will mark a year since the chipmaker first shocked Wall Street with its AI chip demand. Since then, mentions of AI have skyrocketed in earnings calls, rising 186% since the first quarter of 2023, according to Bank of America Research.

This comes as the AI ​​conversation has quickly shifted from AI chipmakers like Nvidia ( NVDA ) and AMD ( AMD ) to AI power users like Alphabet ( GOOG , GOOGL ), Meta ( META ), Amazon ( AMZN ) and Microsoft (MSFT). Recently, strategists have highlighted an expansion into other sectors that could benefit from increased energy use, such as Energy ( XLE ), Utilities ( XLU ), and Commodities.

“It’s not just about NVDA anymore,” Bank of America U.S. and Canada equity strategist Ohsung Kwon wrote in a note to clients on Monday.

This change has already started in the market. Several precious metals, including copper (HG=F), which strategists have said will benefit from AI spending, hit recent highs. The utilities and energy sectors are two of the best-performing sectors in the S&P 500 (^GSPC) this year, up about 15% and 13%, respectively.

That’s trickled down to individual names that are now rivaling Nvidia’s meteoric rise in stock since early 2024. Texas-based Vistra Corp ( VST ) is up roughly 140% this year, while shares of Constellation Energy ( CEG ) have soared nearly 90%, which is almost in line with Nvidia’s growth this year.

In a note on Sunday, Morgan Stanley chief investment officer Mike Wilson listed Utilities as an overweight sector, noting that it offers “the theme of the power of AI.” Wilson noted that the Power and Utilities team at Morgan Stanley believes electricity could grow from 3% of total US consumption in 2023 to about 10% by 2030, driven by new AI data centers that are 50 times larger than the previous ones.

“Both traditional and alternative energy providers have the potential for upside revisions amid the growing need for AI data center power and more favorable data center energy deals,” Wilson wrote.

And companies have also played their part in building AI.

Research from Goldman Sachs’ equity strategy team led by David Kostin shows AI mentions increased in the first quarter. More than 66% of companies in the Energy sector mentioned AI during their earnings calls this quarter, up from 19.1% last quarter.

Given the big-picture implications, investors will be closely watching Nvidia’s report on colors in AI chip demand.

So far, Nvidia has consistently surprised investors on this front, consistently topping analysts’ expectations for quarterly results and raising its outlook for the coming quarter amid robust demand for its AI servers.

If this trend continues or breaks, it could now have consequences for a number of sectors.

“If the markets wake up to say, ‘Hey, maybe we got a little excited about this and maybe we pulled forward some of these gains just a little bit,’ and that’s reflected in those valuations,” JPMorgan Asset Management’s global market. Strategist Jack Manley told Yahoo Finance, “that’s where I think you have the potential for a bumpy road.”

BRAZIL - 2024/03/22: In this photo illustration, the Nvidia Corporation logo appears on a smartphone screen, with a stock market graphic in the background.  (Photo illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)BRAZIL - 2024/03/22: In this photo illustration, the Nvidia Corporation logo appears on a smartphone screen, with a stock market graphic in the background.  (Photo illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)

The Nvidia Corporation logo appears on a smartphone screen, with a stock market graphic in the background. (Rafael Henrique/SOPA Images/LightRocket via Getty Images) (SOPA Images via Getty Images)

Josh Schafer is a reporter for Yahoo Finance. Follow him to X @_joshschafer.

Click here for an in-depth analysis of the latest stock market news and events that move stock prices.

Read the latest financial and business news from Yahoo Finance


#Nvidia #chip #demand #matter #tech #trade
Image Source : finance.yahoo.com

Artificial intelligence enthusiasm has spread throughout the stock market.

Nvidia’s ( NVDA ) earnings call Wednesday night will mark a year since the chipmaker first shocked Wall Street with its AI chip demand. Since then, mentions of AI have skyrocketed in earnings calls, rising 186% since the first quarter of 2023, according to Bank of America Research.

This comes as the AI ​​conversation has quickly shifted from AI chipmakers like Nvidia ( NVDA ) and AMD ( AMD ) to AI power users like Alphabet ( GOOG , GOOGL ), Meta ( META ), Amazon ( AMZN ) and Microsoft (MSFT). Recently, strategists have highlighted an expansion into other sectors that could benefit from increased energy use, such as Energy ( XLE ), Utilities ( XLU ), and Commodities.

“It’s not just about NVDA anymore,” Bank of America U.S. and Canada equity strategist Ohsung Kwon wrote in a note to clients on Monday.

This change has already started in the market. Several precious metals, including copper (HG=F), which strategists have said will benefit from AI spending, hit recent highs. The utilities and energy sectors are two of the best-performing sectors in the S&P 500 (^GSPC) this year, up about 15% and 13%, respectively.

That’s trickled down to individual names that are now rivaling Nvidia’s meteoric rise in stock since early 2024. Texas-based Vistra Corp ( VST ) is up roughly 140% this year, while shares of Constellation Energy ( CEG ) have soared nearly 90%, which is almost in line with Nvidia’s growth this year.

In a note on Sunday, Morgan Stanley chief investment officer Mike Wilson listed Utilities as an overweight sector, noting that it offers “the theme of the power of AI.” Wilson noted that the Power and Utilities team at Morgan Stanley believes electricity could grow from 3% of total US consumption in 2023 to about 10% by 2030, driven by new AI data centers that are 50 times larger than the previous ones.

“Both traditional and alternative energy providers have the potential for upside revisions amid the growing need for AI data center power and more favorable data center energy deals,” Wilson wrote.

And companies have also played their part in building AI.

Research from Goldman Sachs’ equity strategy team led by David Kostin shows AI mentions increased in the first quarter. More than 66% of companies in the Energy sector mentioned AI during their earnings calls this quarter, up from 19.1% last quarter.

Given the big-picture implications, investors will be closely watching Nvidia’s report on colors in AI chip demand.

So far, Nvidia has consistently surprised investors on this front, consistently topping analysts’ expectations for quarterly results and raising its outlook for the coming quarter amid robust demand for its AI servers.

If this trend continues or breaks, it could now have consequences for a number of sectors.

“If the markets wake up to say, ‘Hey, maybe we got a little excited about this and maybe we pulled forward some of these gains just a little bit,’ and that’s reflected in those valuations,” JPMorgan Asset Management’s global market. Strategist Jack Manley told Yahoo Finance, “that’s where I think you have the potential for a bumpy road.”

BRAZIL - 2024/03/22: In this photo illustration, the Nvidia Corporation logo appears on a smartphone screen, with a stock market graphic in the background.  (Photo illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)BRAZIL - 2024/03/22: In this photo illustration, the Nvidia Corporation logo appears on a smartphone screen, with a stock market graphic in the background.  (Photo illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)

The Nvidia Corporation logo appears on a smartphone screen, with a stock market graphic in the background. (Rafael Henrique/SOPA Images/LightRocket via Getty Images) (SOPA Images via Getty Images)

Josh Schafer is a reporter for Yahoo Finance. Follow him to X @_joshschafer.

Click here for an in-depth analysis of the latest stock market news and events that move stock prices.

Read the latest financial and business news from Yahoo Finance


#Nvidia #chip #demand #matter #tech #trade
Image Source : finance.yahoo.com

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