The U.S. stock market has too much "appetite", will Nvidia's performance be difficult to support its stock price?

Zhitong Finance learned that the financial reports of the world's largest technology companies mostly brought good news. There is currently only one piece missing from the performance section of the technology giants: NVIDIA (NVDA.US). The company's dominance in the chips that do the heavy lifting for artificial intelligence computing puts it in the spotlight for a market attracted by the emerging technology. The company won't report earnings until May 22.

Prior to this, published data showed healthy growth in corporate profits, demand for artificial intelligence tools boosted sales of cloud computing services, and there are signs that corporate spending on artificial intelligence equipment will continue to increase. Among Nvidia's largest customers are Meta Platforms (META.US), Microsoft (413.54, 6.88, 1.69%) (MSFT.US), Amazon (188.7, 2.49, 1.34%) (AMZN.US) and Alphabet (GOOGL.US) ) all said that capital spending this year will maintain the current pace or increase spending.

"You're going to see a lot of chip buyers come in and say we've bought a lot and we're buying more," Mike Bailey, director of research at Fulton Breakefield Broenniman LLC, said on Friday. "The question for Nvidia is: Is this enough? ?”

Nvidia shares have rebounded since April 19, when the artificial intelligence hardware maker tumbled ahead of the big tech company's first week of earnings. The stock has gained 20% since then, but is still down about 3% from its March peak. With shares of other AI hardware makers falling after strong earnings reports, it's clear expectations are high.

Although its competitor, chipmaker AMD (AMD.US), raised its sales forecast for artificial intelligence accelerators this year from US$3.5 billion to US$4 billion, the company still focused on May 1. fell nearly 9%. Server maker Supercomputer (SMCI), which has gained more than 190% this year, fell 14% after the company reported earnings, although its guidance for revenue and profit far exceeded analysts' average expectations.

With about 80% of the companies in the S&P 500 having reported earnings, profits from technology and communications services companies are beating expectations at an alarming rate. Data showed that about 90% of technology and communication services companies beat earnings expectations, well above the benchmark index average of 79%.

The problem is that after driving the technology-heavy Nasdaq 100 Index up more than 35% in the past 12 months, it is difficult for these results to have an impact on the stock market. Judging from the stock price trends the day after the earnings report was released, these two sectors ranked at the bottom among the major sectors of the S&P 500 Index. Technology stocks fell an average of about 1.5%, while communications stocks fell an average of 2.7%.

However, Solita Marcelli, chief investment officer of financial services Americas at UBS (27.6, 0.43, 1.58%), believes that artificial intelligence computing stocks are still attractive, and capital expenditures by Microsoft, Alphabet, Meta and Amazon this year are expected to exceed US$200 billion. That's $20 billion higher than the previous estimate. “We are encouraged by the many positives emerging from technology fundamentals during the first-quarter earnings season, which in our view will continue to support investments in generative AI,” Marcelli said.