Nvidia is clearly in a strong position as a company. There's no shortage of demand for its artificial intelligence-powering chips, and it has grown at an incredible pace since being conceived in a Denny's booth over breakfast in 1993.
It's also been an incredible stock. Shares rose 171% in 2024 and 239% in 2023 as it raced toward a market capitalization that at times exceeded $3 trillion. It was largely responsible for a lot of the S&P 500's gains those years. But its journey is now also a big part of the wider market's weakness.
Recently the stock has run into trouble, even though the company seems to be doing just fine. Shares are down 14% since the start of the year after slipping on Tuesday, when CEO Jensen Huang gave his keynote address at its key developer conference.
There is plenty in the pipeline, but investors were a bit disappointed that the next big leap in computing performance won't happen until the second half of 2027.
This encapsulated Nvidia's problem -- it has exceeded expectations for so long that it's becoming almost impossible to impress.
The same could be said for much of the so-called Magnificent Seven tech names that powered the S&P 500 higher over the past few years. Google-parent Alphabet, Amazon, Apple, Microsoft, Facebook-parent Meta Platforms, and Tesla all have their own stories and aren't really riding as a gang anymore, but this is a common theme.
And this explains why fund managers are busy rotating away from the U.S. at the moment. Aside from the turbulence around President Donald Trump's tariffs or geopolitics, the feeling is that the best growth now lies elsewhere. Add in the Federal Reserve's reluctance to cut interest rates -- Wednesday is decision day -- and it's clear that things are changing.
It's a significant shift, but if the past few decades are anything to go by, investors' attention will come back to Big Tech eventually. If their operations stay strong, the prospects for their stocks won't stay low for long.
-- Brian Swint
***
Chip Maker's CEO Lays Out Case for Its Continued Growth
Nvidia CEO Jensen Huang told the audience at his developer conference on Tuesday that their next generation Blackwell is in full production, that customer demand is "incredible," and that artificial intelligence is at an inflection point. It is the core of the 2025 to 2026 bull case for Nvidia stock.
-- Reasoning AI, training reasoning AI systems, and AI agents have vastly
increased the amount of computation needed, Huang said at the GTC 2025
conference. But while customers are snapping up Blackwell AI accelerators,
doubt is creeping in about the next phase of the AI revolution and
Nvidia's leadership in it.
-- The new era will involve much more inference, the work that happens after
an AI model is prompted with questions. With traditional scaling slowing,
model makers like OpenAI and DeepSeek have moved to "reasoning" models
that work through a problem in steps.
-- Huang's pitch is that this new stage will require even more Nvidia
hardware because the inference demand will be snowballing in 2025 and
2026. It is a crucial underpinning for a scenario in which Nvidia's very
high growth rates continue into next year.
-- Huang announced the next generation of AI data center chips named Vera
and Rubin available in 2026. Vera is an Arm-based CPU chip that will
double performance versus its predecessor. Rubin GPU chips will replace
the Blackwell architecture announced at last year's GTC.
What's Next: The AI servers built around these new chips will offer over three times the performance of Blackwell Ultra servers, which will debut in the second half of 2025. A Vera Ultra server coming in the second half of 2027 will provide 14 times the performance of Blackwell Ultra.
-- Adam Levine
***
Trump Draws Rare Public Rebuke by SCOTUS Chief Justice
President Donald Trump's demand that a federal judge be impeached drew a rare public rebuke from Supreme Court Chief Justice John G. Roberts Jr. during a day in which the administration and its efforts to reshape the federal government appeared headed toward a showdown at the high court.
-- Roberts said in a statement that impeachment is "not an appropriate
response to disagreement concerning a judicial decision" after Trump
lashed out at Chief Judge James Boasberg of the District Court of D.C.,
who sought to block the administration's deportation flights to El
Salvador last weekend.
-- The flights, which the administration justified by invoking an 18th
century law, occurred despite Boasberg's order to stop them. Boasberg
ordered the government to provide details, and the Justice Department has
held that there is no justification to do so but it would agree to give
it in private.
-- Still, Trump's moves to exercise the power of the executive branch are
coming up against some roadblocks. Another federal judge ordered Elon
Musk's Department of Government Efficiency to halt efforts to dismantle
the U.S. Agency for International Development, saying it probably
violated the constitution, especially the separation of powers.
-- And multiple federal agencies are balking at being forced to reinstate
20,000 workers who were recently fired, citing "substantial burdens." The
reinstatements were ordered by a federal judge in Maryland and have been
appealed to the Fourth Circuit Court of Appeals.
What's Next: Trump also fired the Federal Trade Commission's two Democratic commissioners, leaving the agency charged with overseeing antitrust and consumer protection matters with two commissioners out of a panel of five. The move could challenge a 1935 Supreme Court precedent concerning the president's power over independent agencies.
-- Janet H. Cho, Liz Moyer, and Bill Alpert
***
Tesla Stock Continues to Sink, and Analysts Are Noticing
Tesla investors have been dealing with a lot, including falling estimates for first-quarter and full-year deliveries and protests against the company while CEO Elon Musk spends a lot of time in Washington, D.C. The stock has lost 44% so far this year and is down 54% from a December high.
-- RBC analyst Tom Narayan cut his Tesla stock price target to $320 from
$440. The average analyst price target is about $366 a share, according
to FactSet, amid weak early 2025 sales. The Street's average target
peaked at about $380 around the end of January.
-- Mizuho analyst Vijay Rakesh cut his full-year delivery estimate from 2.3
million to 1.8 million vehicles, about what Tesla delivered in 2024. He
said Tesla's woes are because of deteriorating geopolitics, brand
perception, stronger Chinese competition, and softer-than-expected demand
for the refreshed Model Y.
-- Tesla's Chinese EV rival BYD unveiled charging technology that can
deliver about 250 miles of range in five minutes, about twice as fast as
Tesla; Li Auto released a new autonomous-driving model; and Xiaomi
reported record fourth-quarter revenue above $13.8 billion.
-- Tesla board chair Robyn Denholm sold $75 million of shares as part of a
predetermined sales plan, according to SEC filings. Board members Kimbal
Musk (Elon's brother) sold about $27 million; James Murdoch sold about
$13 million; and Tesla CFO Vaibhav Taneja sold over $5 million.
What's Next: Tesla bull and Wedbush analyst Dan Ives believes the word balance has been missing with regard to Musk and his ability to run Tesla while also driving his work in the Trump administration, adding, "Perception has become reality for Tesla shares."
-- Al Root and Janet H. Cho
***
Wall Street's 'Fear Gauge' Is Flashing Concern, But Not Panic
A barometer commonly called Wall Street's fear gauge has closed above 20 for 12 straight trading days, territory associated with volatility and falling stocks. The pattern in the Cboe Volatility Index reflects investors' concerns about trade wars, tariffs, and the risk of recession. They're not panicking, yet.
-- The VIX, which measures the expected volatility in the S&P 500 over the
next 30 days, jumped 10% during the day on Tuesday, the largest
percentage gain since last week, according to Dow Jones Market Data. The
last time the VIX was sustainably below 20 was late February.
-- Nicholas Colas, co-founder of DataTrek Research, said an elevated VIX
"tells us that market volatility is structurally higher than usual,"
noting that months of higher levels is a common indicator of a bear
market ahead. "We are not there yet, but a lower VIX would be a good
sign."
-- The Federal Reserve will conclude its two-day policy meeting later today.
Futures markets have ruled out an interest-rate cut, but Wall Street will
pay close attention to Chair Jerome Powell's press conference and any
updates to the latest economic projections by Fed officials.
-- In the meantime, investors are fleeing for safe havens such as gold,
where futures continue to set records. The yellow metal is up for six
consecutive sessions, settling above $3,035 a troy ounce on Tuesday.
Ongoing worries over tariffs, inflation and wars have investors avoiding
riskier assets.
What's Next: Chris Senyek of Wolfe Research expects stocks to remain lower until more clarity emerges on the extent of tariffs on April 2. But despite the volatility index's spike, there hasn't been widespread selling in stocks and fear that more losses might follow.
-- Karishma Vanjani and Janet H. Cho
***
Astronauts Boeing Left In Space Are Back, Courtesy of SpaceX
Elon Musk's rocket company SpaceX helped NASA astronauts Butch Wilmore and Suni Williams finally arrive home after 286 days in space, with a little help from The pair returned to Earth on a reusable SpaceX Dragon capsule after technical problems with Boeing's Starliner spaceship prevented them from returning on that ship.
-- Wilmore and Williams were only supposed to be at the International Space
Station (ISS) for about a week after arriving on the first crewed test
flight of the Starliner in June 2024. The Dragon capsule detached from
the ISS Tuesday and the crew splashed down off the coast of Florida just
before 6 p.m. Eastern time.
-- The return highlights just how hard it is to build space technology and
how much progress SpaceX has made. Meanwhile, Boeing has failed to fully
complete a crewed test.
-- At current levels, Boeing stock is worth $120 billion. SpaceX is valued
at $350 billion based on private market transactions. It has become the
most valuable aerospace and defense company on -- or above -- Earth.
What's Next: Wall Street now estimates Boeing will deliver about 550 planes in 2025. Boeing had faced heavy scrutiny from regulators and investors ever since an emergency door plug blew out of a 737 MAX-9 jet in January 2024, leading to slower production and lower estimates, and Starliner's failure hasn't helped the stock. Hitting those plane targets should be a positive.
-- Al Root and Elsa Ohlen
***
Dear Quentin,
I'm 35 years old. I have zero retirement savings, zero savings, about $8,000 worth of debt and now the phone company has dinged my credit seven times so that's gone down the drain as well.
I am absolutely terrible at managing money. I need help, I need someone to lead me in the right direction and to tell me how on earth to do and how to get on top of this. It's driving me crazy. I've been terrible with money all my life.
I make about $2,800 a month and an extra $200 to $800 on freelancer work a month (it varies a lot, I've gotten thousands some months and nothing in others). I want to get into a financial position where I've got decent retirement savings.
-- Thirtysomething
Read the Moneyist's response here.
-- Quentin Fottrell
***
-- Newsletter edited by Liz Moyer, Patrick O'Donnell, Rupert Steiner
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 19, 2025 07:05 ET (11:05 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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