To The Moon

AI Stocks Decline but Present a Buying Opportunity

Artificial intelligence (AI) stocks have recently seen a decline, with major tech companies like $NVIDIA Corp(NVDA)$ and $Microsoft(MSFT)$ falling by 11% from their 2024 peak. However, Goldman Sachs views this as a potential buying opportunity, expecting that lower interest rates will fuel growth in IT projects and AI, particularly after upcoming conferences reveal new advancements. The firm believes that current market pessimism surrounding AI is exaggerated and points to strong fundamentals. Goldman forecasts that AI companies could see their net income double within the next year.

@Do_Trading / X

Power Generation Companies Linked to AI Growth

Power generation companies, such as $Vistra Energy Corp.(VST)$ . and Constellation Energy Corp., which support AI infrastructure through data centers, are also projected to grow as demand for energy from data centers continues to rise. This sector, closely tied to AI developments, is expected to benefit from the increasing need for high-performance computing.

NVDA Technical Analysis: Positive Trend Bias

Analyzing Nvidia's (NVDA) trend bias, there’s an uptick in the model, which suggests upward momentum. The Trend Bias model assesses market trends by examining the asset’s price relative to its moving averages, typically over a 10-day or 50-day period. A positive trend bias indicates that prices are consistently above these averages, signaling bullish movement. Currently, NVDA is positioned with an upward trend.

$NVDA

Market Sentiment: 25 Delta Skew and Call Bias

Another key indicator, the 25 delta skew, reveals a shift toward a call bias, suggesting that traders are anticipating upward moves in AI-related stocks. The 25 delta skew measures the difference in implied volatility between out-of-the-money calls and puts, and a tilt toward calls reflects bullish market sentiment.

$NVDA

CTA Influence and Market Liquidity

Recent market activity shows that Commodity Trading Advisors (CTAs) have been injecting liquidity into the market, which typically signals increased market participation and potential upward momentum. This added liquidity can drive price movements, particularly in trend-following strategies, further supporting the view of a market rebound.

Key Themes in the Broader Market

• $Intel(INTC)$ plans to turn its foundry business into a subsidiary, spending $25 billion annually on the division for the past two years.

• $Amazon.com(AMZN)$ is instructing its corporate employees to return to the office five days a week, reflecting a shift in work policy.

• Boeing faces cost-cutting measures, including a hiring freeze, as more than 30,000 factory workers strike after rejecting a new contract.

Conclusion: AI Market Outlook and Broader Trends

Goldman Sachs remains optimistic about the future of AI, despite the recent drop in stock prices, and highlights the potential for growth in both technology and related sectors. Market indicators like NVDA’s trend bias and CTA liquidity injections point toward possible upward momentum, suggesting that the dip in AI stocks may offer a strategic entry point for investors.

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This analysis is for informational purposes only and should not be construed as financial advice. Market conditions are fluid, and investors should consult a financial advisor before making any decisions. Past performance is not indicative of future results.