Nvidia CEO sees years of sustained AI spending

General market commentary

Friday saw a strong rebound in equities as buyers stepped back in after a volatile spell. Futures had pointed lower overnight, but sentiment improved rapidly during the session, lifting the S&P 500 by around 2 percent, pushing the Dow to a new record above 50,000, and driving a near 3.5 percent gain in the Russell 2000. The move reflected renewed risk appetite rather than fresh macro news, with cyclical sectors and smaller companies leading the advance. Government bonds sold off modestly as investors rotated back into equities, nudging the US 10 year yield higher, while the dollar and oil were broadly steady. Gold and silver edged higher on the day but remained well below their recent peaks.

Looking at the week as a whole, markets were defined by rotation rather than outright weakness. Technology, particularly software, came under pressure as investors grew more cautious about valuations, AI driven disruption and the scale of capital spending being announced by the largest firms. In contrast, more traditional sectors such as energy, transport, chemicals and financials outperformed, helping headline indices hold up despite losses in parts of the tech complex. Economic fundamentals remain supportive, with improving consumer sentiment and broad based earnings growth cushioning the impact of valuation resets. Overall, recent price action points to repricing and a broadening of market leadership rather than a deterioration in fundamentals, although uncertainty around earnings and investment spending suggests volatility is likely to persist in the near term.

Latest market and economic update

Asian markets rallied sharply this morning, led by Japan as the Nikkei hit record highs after Prime Minister Sanae Takaichi’s decisive election win boosted policy confidence. South Korea’s KOSPI surged on strong gains in Samsung Electronics and SK Hynix. Tech and AI stocks lifted Hong Kong, China and Australia, while broader sentiment improved across the region.

US equity futures edged higher on Sunday night as Wall Street built on a late-week rebound driven by gains in technology and AI-related shares. Investors remain cautious ahead of delayed US jobs and inflation data this week. The recent rally followed bargain buying in tech shares and easing bond yields, with earnings from major companies also in focus.

European equities rose, with the STOXX 600 up 0.9 percent on Friday and ending the week higher. Shares in Stellantis slumped a record 25 percent, weighing on autos, while Novo Nordisk gained after regulatory action on copycat drugs. Bank shares advanced, though Societe Generale slipped on weaker investment banking revenue.

The US dollar edged slightly lower against major currencies as investors waited for key US jobs and inflation data later this week. The euro was steady, with EUR/USD hovering around 1.1826. Overall currency moves were subdued, as traders remained cautious after recent dollar strength and sought clearer signals on the outlook for US interest rates.

Oil prices fell in Asian trading after the US and Iran agreed to continue nuclear talks, easing concerns over Middle East conflict and reducing risk premiums. A resilient dollar also weighed on prices. Brent and WTI both dropped about 0.7%. Investors are now focused on upcoming US and Chinese economic data for signals on oil demand and interest rate expectations.

Japan’s Prime Minister Sanae Takaichi won a landslide election, securing a two-thirds parliamentary supermajority. Her victory clears the way for tax cuts and higher defence spending, unsettling markets and China. Backed by strong public support and a Trump endorsement, she now has broad power to push through major economic and security reforms.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Nvidia chief Jensen Huang said heavy spending on artificial intelligence is necessary as a once in a generation infrastructure buildout unfolds over several years. He said demand for Nvidia’s chips remains strong, lifting shares nearly 8 percent. Huang said AI firms are constrained by computing capacity, praised Meta’s use of AI and said conceding China would hurt global competitiveness.

Samsung Electronics shares jumped more than 5% this morning after reports it will begin mass production of next-generation HBM4 memory chips later this month. The chips are expected to be supplied to Nvidia for AI processors. Samsung has reportedly passed Nvidia’s quality tests, helping it close the gap with rival SK Hynix in advanced memory technology.

US regulators moved to crack down on Hims & Hers over its low cost weight loss pill, restricting access to GLP 1 ingredients and referring the firm to the Justice Department. The company said it will stop offering the compounded semaglutide pill. The action may curb copycat drugs, benefiting Novo Nordisk and Eli Lilly, as Hims shares fell over 15 percent in after hours trading.

Elon Musk said SpaceX has shifted its main focus to building a self-growing city on the Moon, which he believes could be achieved within a decade due to shorter travel times. Mars remains a longer-term ambition. The comments come ahead of a potential SpaceX IPO and plans to expand into AI and space-based data centres.

Stellantis announced €22.2 billion of charges as it scaled back electric vehicle ambitions, admitting earlier assumptions were too optimistic. The writedowns reflect weaker EV demand, quality issues and supply chain cuts. Management is refocusing on customer demand while maintaining some electrification investment, forecasting losses in 2025 and growth in 2026.

Apple is set to allow third party voice controlled AI apps in CarPlay, marking a shift from its Siri only approach, according to reports. Firms such as OpenAI, Anthropic and Google could offer voice enabled apps, though Siri will remain the default. The change, expected within a month, would let users access other AI assistants through the CarPlay interface.

The US Justice Department is investigating Netflix for potential anticompetitive behaviour as it reviews the company’s proposed acquisition of Warner Discovery’s studios and HBO Max. Officials are examining whether the deal could strengthen Netflix’s market power or create a monopoly. The $72 billion transaction faces scrutiny alongside other major media mergers under US antitrust law.

Live Nation is reportedly in talks with senior US Justice Department officials to avoid a trial over claims it operates an illegal monopoly. The DOJ and several states want to break up the firm, accusing it and Ticketmaster of inflating ticket prices and harming consumers, with criticism intensifying after Ticketmaster’s handling of Taylor Swift’s Eras Tour ticket sales.

Intel and AMD have warned Chinese customers of server CPU shortages, with Intel delivery times stretching up to six months and AMD facing multiweek delays. Strong demand from AI infrastructure has lifted prices and intensified backlogs. The constraints, reported for the first time, add to supply pressures already driven by soaring memory demand and limited manufacturing capacity.

Philip Morris International forecast stronger than expected 2026 profit growth, despite investor concerns over rising competition for its Zyn nicotine pouches. The company expects earnings growth and said it is ready to update products to defend market share. Shares recovered to trade higher, while management maintained confidence in long term growth from smoking alternatives.

Under Armour reported a smaller than expected fall in third quarter revenue, helped by turnaround efforts and a streamlined product range that supported demand during the holiday season. Sales fell 5 percent to $1.33 billion, beating forecasts. Investors welcomed the update, sending the shares up about 20 percent in Friday’s session.

Space based data centres face major technical challenges despite growing interest, according to Voyager Technologies chief Dylan Taylor. He said cooling in space remains a key obstacle, making rapid deployment unlikely. While SpaceX has the launch capability, Taylor said the technology will take time to mature, with Voyager progressing its Starlab project for a 2029 launch.

Shares in major US homebuilders fell on Friday after reports the White House is considering an antitrust investigation into the sector over housing affordability concerns. Companies including Lennar and DR Horton declined as much as 3 percent. The Justice Department is said to be examining whether industry information sharing could restrict supply or coordinate pricing.

Analysts were split on Amazon, with DA Davidson downgrading the shares to Neutral, warning it is losing ground in cloud computing and faces strategic risks from rivals’ faster AI progress. In contrast, BMO Capital defended heavy capital spending as a long term growth driver, citing strong AWS and advertising momentum, infrastructure expansion and rising investment in artificial intelligence.

Analysts at Semianalysis said they see no indications Nvidia will use Micron’s next generation HBM4 memory, cutting its expected supply share to zero. The firm cited performance concerns and expects Nvidia’s HBM4 needs to be met by SK Hynix and Samsung, raising questions over Micron’s position in the AI memory market despite broader data centre investment growth.

Bank of America said recent sell-offs in US power shares reflect policy misinterpretation rather than weak fundamentals. It highlighted upside in Constellation Energy, Talen Energy and Vistra, citing durable cash flows, data centre contracts and incumbent advantages. The bank said valuations remain attractive, supported by nuclear and gas assets and limited risk of oversupply.

Jefferies said Palantir faces further downside as valuation pressures persist despite improving fundamentals. Analyst Brent Thill said the shares remain expensive versus peers, leaving them vulnerable to shifts in AI sentiment and software momentum. Jefferies maintained its Underperform rating, arguing valuation risks outweigh benefits of strong growth and expanding margins.

Citi upgraded Estée Lauder to Buy, saying a sharp post-earnings selloff has created a buying opportunity as fundamentals improve. Shares fell nearly 20 percent after weak travel retail weighed on results. Citi sees improving trends in China and the US, recovering margins and upside to growth guidance, maintaining its $120 price target.

Morgan Stanley cut its price target on Kering to €315, citing a slower start to 2026 and renewed doubts over Gucci’s turnaround. The bank lowered sales forecasts for the coming years but kept an Overweight rating, saying the valuation remains attractive and fashion experts are still positive on creative director Demna’s longer-term impact.

Upcoming data and events

Monday’s main economic highlights include US consumer inflation expectations, Treasury bill auctions and speeches from Fed officials Waller and Bostic. Major earnings come from UniCredit, SoftBank, and Becton Dickinson, setting the tone for a busy global corporate reporting day.

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