Nvidia Earnings Key for Market

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Nvidia Earnings Key for Market

Nvidia's upcoming earnings call has investors closely watching for updates on AI spending, competition from DeepSeek, and margins on its new Blackwell chip. Analysts expect another strong quarter, but Nvidia must not only meet but exceed expectations to maintain its momentum.

Wall Street forecasts revenue of $38 billion, slightly above Nvidia’s $37 billion projection. Despite the rise of Chinese AI startup DeepSeek, analysts see no slowdown in AI infrastructure investment, with Amazon, Meta, Microsoft, and Alphabet still planning to spend $325 billion on AI development.

CEO Jensen Huang has emphasized strong demand for Blackwell GPUs, though concerns remain over potential overheating issues and declining margins as some customers seek chips without Nvidia’s GB200 system. Investors also worry about the broader market impact if Nvidia underperforms, as the company plays a key role in the S&P 500’s strength. However, as long as Big Tech keeps buying, Nvidia remains the dominant AI chip supplier.

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Trump Praises Apple’s $500B Commitment

Apple announced plans to invest $500 billion in the U.S. over four years, including supplier spending, AI server manufacturing, and a Detroit training facility. However, analysts suggest much of this spending was already projected, aligning with Apple’s historical financial patterns rather than new investments.

Apple has spent $1.1 trillion over the past four fiscal years, and projections indicate $1.3 trillion in total expenses over the next four years. If U.S. spending aligns with revenue share, about 40% of projected global spending already equals $505 billion.

While Apple aims to diversify manufacturing beyond China, this move also carries political significance. President Donald Trump praised the announcement, boosting Apple's standing domestically. However, a dramatic increase in spending could pressure Apple’s stock, which has risen 36% in the past year. Unlike its AI-focused rivals, Apple has maintained fiscal discipline, avoiding the massive AI spending spree seen at Microsoft, Amazon, and Alphabet.

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Microsoft Scales Back AI Data Centers

Microsoft is canceling data center leases across the U.S., signaling a potential AI capacity reassessment, according to TD Cowen. The company has voided leases totaling hundreds of megawatts, slowing infrastructure expansion and shifting international spending toward domestic projects.

This move raises questions about whether Microsoft is building more AI computing power than needed. Despite its $80 billion AI infrastructure spending commitment, the pullback suggests Microsoft may be reevaluating demand projections, particularly as OpenAI explores alternative partnerships with companies like Oracle.

The report triggered a drop in European energy stocks, as investors speculated that big tech firms may need less power for future AI development. Microsoft maintains that its AI investments remain on track, but Wall Street analysts are closely watching whether this slowdown reflects AI overcapacity concerns. As rival AI firms, including DeepSeek, lower costs, Microsoft’s strategic infrastructure adjustments may indicate a more cautious long-term AI approach.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.