CNBC Daily Open: We could still close the year with a rally despite AI slump

U.S. markets opened lower as the Nasdaq fell 0.84% with heavyweight tech names under pressure—Apple, Meta and Oracle slipped more than 1% and Nvidia dropped almost 2% ahead of Wednesday’s Q3 report as investors scrutinize CEO Jensen Huang’s claim of roughly $500 billion of business for 2025–26 and the downside risk from any muted guidance. Some strategists (Canaccord, HSBC) still see scope for a year‑end equity rally or melt‑up despite valuation and capex worries; market breadth was mixed Monday with Alphabet up after Berkshire disclosed a stake and Asia‑Pacific markets tracking Wall Street lower. Policy and macro threads add uncertainty—Fed officials offered divided views on the pace of rate cuts—and India posted a record $41.7bn October trade deficit driven by gold imports, while wealthy holders are increasingly leasing bullion to generate yield amid elevated gold prices.

Analysis

U.S. risk assets opened lower Monday with the Nasdaq Composite down 0.84% as heavyweights Apple, Meta and Oracle each slipped more than 1% and Nvidia fell almost 2%; Alphabet was an outlier, rising on news that Berkshire Hathaway took a stake. Market participants are positioning for Nvidia’s Q3 report Wednesday after CEO Jensen Huang said in October the company had roughly $500 billion of business booked for 2025–26, a data point that raises expectations for robust 2026 revenue. Analysts warn the stock is highly sensitive to guidance—Baird’s Ross Mayfield said even slightly muted demand forecasts would be punished—so the company’s forward commentary, not just quarterly results, is the key market trigger. Broader market context is mixed: Canaccord and HSBC signal a higher probability of a year-end rally or “melt-up,” while Fed officials offered split views on the pace of rate cuts and India reported a record $41.7 billion October trade deficit driven by Diwali gold imports. Gold prices are at historic highs and wealthy holders are increasingly leasing bullion to generate yield, adding a liquidity/yield dynamic to the commodity backdrop that could influence safe-haven flows.

Key Decisions for Investors

• Ahead of Nvidia’s Q3 report, reduce concentration risk in AI/semiconductor exposure or hedge positions given the elevated sensitivity to guidance and the $500bn bookings narrative
• Monitor Nvidia’s guidance closely and be prepared to trim or rotate out of cyclically linked tech names if commentary on 2026 demand is muted
• Maintain selective technology exposure on any pullback rather than wholesale selling, since several strategists still expect a year-end rally, and scale positions using staged entries
• Increase monitoring of gold as a tactical hedge or diversification sleeve—consider modest allocation to GLD or physical bullion given record prices and leasing activity that signals durable demand