Nvidia's $1 Trillion Projection Is Surprisingly Bad News for Investors
The AI firm's new expectations comes at a bad time with a Federal Reserve rate cut decision looming.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
Key Speakers At The Nvidia GTC Conference
The market was higher on Monday, driven primarily by some optimism about oil. However, the most interesting and troubling action of the day was in Nvidia (NVDA) .
At the Nvidia GTC developer conference, CEO Jensen Huang delivered what sounded like a blockbuster headline. He expects purchase orders for Blackwell and Vera Rubin systems to reach $1 trillion through 2027, which is double what he had projected through 2026. That kind of number sounds spectacular and gets breathless media coverage. The problem is that $1 trillion through 2027 represents only about 7% upside to current Wall Street expectations. That is a solid beat but not the jaw-dropping acceleration the headline suggested.
The market figured that out quickly. The indices and Nvidia spiked on the initial announcement, and then the selling hit almost immediately. Nvidia closed up only 1.5%, well off its intraday highs, and the weakness rippled through the entire market. The S&P 500 gained 1% on the day but the weak finish gives it the look of a dead cat bounce. The Magnificent Seven (MAGS) finished poorly across the board.
Breadth held up reasonably well with 62% of stocks finishing in positive territory, but the rush to sell what looked like genuinely positive news illustrates just how nervous investors remain. The AI sector has been badly beaten up already and yet there is still no confidence that these names represent good value even after months of poor performance. Concerns about excessive capital spending and a murky path to profitability have not gone away.
That lack of conviction in AI combined with ongoing uncertainty about Iran and oil is preventing any sustained market upturn from developing. The Federal Reserve decision coming on Wednesday adds another layer of difficulty by putting the inflation debate front and center at exactly the wrong moment.
I would love to be aggressively bullish and suggest loading up on growth names. It is not time to do that and the action in Nvidia today is Exhibit A for continued caution. The charts will develop and the right moment will come to get busy. Today was not that day.
Have a good evening. I'll see you tomorrow.
Related: Former Intel Operatives Say Middle East Conflict Is Shifting Beyond Oil
At the time of publication, DePorre had no positions in any securities mentioned.
