What Nvidia says about AI chip demand matters more than just the tech trade.

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Artificial intelligence excitement is spreading throughout the stock market.

Wednesday night's Nvidia (NVDA) earnings call will mark a year since the chipmaker first shocked Wall Street with demand for AI chips. Since then, AI mentions have skyrocketed over earnings calls, growing 186 percent through the first quarter of 2023, according to Bank of America Research.

This comes as the conversation around AI has increasingly shifted from AI chipmakers like Nvidia ( NVDA ) and AMD ( AMD ) to AI power users like Alphabet ( GOOG , GOOGL ), Meta ( META ), Amazon ( AMZN ), and has moved to Microsoft (MSFT). . More recently, strategists have highlighted expansion into other sectors that could benefit from increased electricity 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 Ohsing Kwon wrote in a note to clients on Monday.

This shift in the market is already underway. Several precious metals, including copper (HG=F), which strategists have said will benefit from AI spending, have hit recent highs. The utilities and energy sectors have been two of the biggest outperformers in the S&P 500 (^GSPC) this year, by about 15% and 13%, respectively.

It's down to the individual names now competing against Nvidia's meteoric stock rise through early 2024. Texas-based Vistra Corp ( VST ) is up nearly 140% this year, while shares of Constellation Energy ( CEG ) are up nearly 90%. %, which is 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 “contrast to the AI ​​power theme.” Wilson highlighted that the power and utilities team at Morgan Stanley believes that electricity could grow from 3% of total US consumption in 2023 to nearly 10% by 2030, driven by new AI data centers that That is 50 times more than the previous one.

“Both traditional and alternative energy providers have the potential to reverse the growing need for AI data center power and the upside of data center power deals,” Wilson wrote. Wilson wrote.

And companies are also playing their part in building AI.

Research from Goldman Sachs' equity strategy team, led by David Kosten, showed that mentions of AI 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.

Looking at the big-picture implications, investors will be watching Nvidia's report closely for color on AI chip demand.

So far, Nvidia has repeatedly surprised investors on that front, consistently topping analysts' expectations for quarterly results and raising its outlook for the coming quarter amid strong demand for its AI servers. is increasing

Whether this trend continues or breaks now may have impacts on various sectors.

“If the markets wake up to say, 'Hey, maybe we got a little too excited about this and maybe we pushed some of these earnings a little bit further,' and that's reflected in those prices.” happens,” JPMorgan Asset Management global market strategist Jack Manley told Yahoo Finance. “That's where I think you have the potential for a little bit of a road.”

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

Josh Shaffer is a reporter for Yahoo Finance. Follow him on X. @_joshschafer.

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