CNBC Daily Open: AI still under pressure — but some analysts see a year-end rally

U.S. markets opened lower Monday as the Nasdaq fell 0.84% with heavyweight tech names under pressure—Apple, Meta and Oracle down more than 1% and Nvidia off nearly 2%—as investors brace for Nvidia’s Q3 report after CEO Jensen Huang said the company has about $500 billion of business booked for 2025–26, a data point that could make any muted 2026 guidance especially punitive. Analysts remain divided—some (Canaccord, HSBC) still expect a year‑end equity rally despite valuation and capex worries—while macro and event risks include a split Fed on the timing of a December rate cut, Alphabet strength after Berkshire disclosed a stake, a 0.54% decline in the Stoxx 600, India’s new U.S. LPG import deal and continued weakness in bitcoin that some see as a leading indicator for stocks; Swiss approval of a U.S. trade framework also stirred political pushback.

Analysis

U.S. markets opened weaker Monday with the Nasdaq Composite down 0.84% as heavyweight technology names led the decline: Apple, Meta and Oracle each fell more than 1% while Nvidia dropped almost 2%; the pan‑European Stoxx 600 declined 0.54% and Alphabet outperformed after Berkshire Hathaway disclosed a stake. Nvidia is the focal point ahead of its Wednesday Q3 report after CEO Jensen Huang disclosed roughly $500 billion of business booked for 2025–26, a data point that raises expectations for 2026 sales and heightens sensitivity to any guidance shortfall. Baird strategist Ross Mayfield warned that even slightly muted demand forecasts would be disproportionately punitive for Nvidia, implying elevated event risk and potential spillover to AI‑linked equities. Broader market signals are mixed: analysts at Canaccord and HSBC still see a higher probability of a year‑end rally or “melt‑up,” the Fed remains divided on the timing of a December rate cut, bitcoin’s weakness is flagged as a possible leading indicator for stocks, and overall sentiment is labelled cautious/mixed with a moderate market impact score of 0.5.

Key Decisions for Investors

• Reduce gross exposure or add short-dated hedges to concentrated AI/semiconductor positions ahead of Nvidia's earnings given the $500 billion backlog has set high guidance expectations and a muted outlook could trigger outsized downside
• Consider opportunistic, size‑controlled purchases in names that showed resilience (e.g., Alphabet) or in beaten-down quality tech only if clarity on demand and Fed signaling improves, rather than increasing leverage into year‑end
• Monitor Fed commentary on labor and the likelihood of a December cut and track bitcoin as a risk barometer; be prepared to tighten risk limits or use volatility hedges if market indicators turn more negative