【Weekly Wealth Trends】AI on the Rise? Mid-to-Downstream Sectors May Spark the Boom!
Hello, tigers!
This week, due to the Thanksgiving holiday, the U.S. stock market had only 3.5 trading days, resulting in relatively quiet activity. Notably, Nvidia’s stock has continued to pull back to around $136 since its earnings release, as its guidance fell short of the market's highest expectations.
However, software stocks tied to AI applications have shown signs of improvement, with short-term gains outpacing the broader market. The Tiger Wealth Research Team believes that mid-to-downstream AI applications may be the next major catalyst!
1. Recent Market Data
A. Macroeconomic Data
November U.S. PMI Composite Index: 55.3 (exceeding the expected 54.7), the highest since April 2022.
Manufacturing PMI: 48.8, marking the fifth consecutive month of contraction.
Services PMI: 57.0, the highest since March 2022.
University of Michigan Consumer Sentiment (Final): 71.8, below the forecasted 73.3.
Initial Jobless Claims: 213,000, the lowest since April, better than the expected 220,000.
B. Earnings Reports
95% of S&P 500 companies have reported Q3 earnings, with 75% beating EPS estimates, aligning with the 10-year average but below the 5-year average of 77%.
Earnings have exceeded estimates by 4.5%, lower than the 5-year average of 8.5%.
C. Valuation
S&P 500 forward P/E ratio: 22.16, near the 91.9th percentile over the past decade.
Nasdaq 100 forward P/E ratio: 27.6, in the 79.9th percentile over the past decade.
D. Market Sentiment
CNN Fear & Greed Index: 64 (Greed).
S&P 500 market breadth has improved, leaning toward a neutral-to-bullish stance.
2. Opportunities in AI Applications
Nvidia's Q3 earnings reported $35 billion in revenue, up 93.5% year-over-year, beating expectations. Data center revenue, driven by AI, grew 112% YoY. Despite this, Q4 revenue guidance of $37.5 billion slightly missed the top-end estimate of $38 billion, triggering market skepticism and a sell-off. Nvidia’s stock fluctuated sharply, reflecting mixed market sentiment.
On the same day, Snowflake’s Q3 results surpassed expectations, with significant upward revisions to its 2025 revenue outlook, driving its stock up over 30% in a single day. Goldman Sachs noted that companies involved in AI applications outperformed the market by about 5% this earnings season.
Historically, profits tend to shift from upstream chipmakers to midstream infrastructure and downstream applications. While Nvidia remains the key player, opportunities in mid-to-downstream AI sectors could be the next growth driver.
3. Trading Focus for the Week
AI Application Stocks and ETFs
Target | Ticker |
Auctions Inc | ACVA |
Snowflake | SNOW |
MongoDB | MDB |
North American Software ETF (IGV) | IGV |
Tiger will share weekly trading trends based on market highlights. Interested users can check the “Wealth” tab under “Featured” or “Market Insights” for more information!
Disclaimer: The listed tradeable assets are data-based summaries and do not constitute investment advice.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
