The AI gold rush has now cooled. Too many earnings from associated comps have not delighted - so traders have become sceptical. Irrespective of how good Nvidia is - and I believe it is very good - it will lead the downdraft - which it did.
The question is now what makes the traders turn back upwards - they need a catalyst. Important week on the earnings calls from Alphabet and Microsoft - if they indicate gung-ho on AI with ongoing capital spend - that will be an initial tinder burn for the fire to get going.
Will the traders go gung-ho - no I don't think so. Ongoing inflation at this level, with associated rates and yields, moves money away from the market to bonds. They also want to see solid earnings growth directly aligned to AI, not just data centre growth - and I don't believe they will.
Right now market is balanced - Nvidia will rise for a couple of days, short-term bounce - but the earnings later in the week will determine all at this stage.
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