"Just when many investors thought that the AI trade as we knew it would go up in a poof of smoke, Jensen Huang's GPU empire, Nvidia ( NASDAQ:NVDA), posted a quarterly earnings result that was a lot better than expected. Undoubtedly, the AI chip giant didn't just serve up a good number; it offered some very strong guidance that was enough to move the needle higher on the stock during Wednesday's after-hours session of trade (shares are up just shy of 5% after the big beat and raise)."
"Not only did Nvidia's big third quarter help its own shareholders breathe a huge sigh of relief amid rising AI anxiety and a big short bet made by none other than the great Dr. Michael Burry, who made a fortune shorting the housing market ahead of the housing meltdown of 2008, but the numbers may very well have saved the AI trade from even more pain."
"Undoubtedly, the Nasdaq 100 has now been hit with a nasty pullback that dragged the index more than 6% from its recent peak. And while it's too soon to tell how Nvidia's numbers will affect its AI-heavy Magnificent Seven peers, I do think that the AI trade will be back on the table after a very brief upset that I'm sure had some investors prematurely hitting the sell button on weakness."
Nvidia delivered a stronger-than-expected third-quarter performance with robust guidance that pushed shares up in after-hours trading. The results relieved investor anxiety surrounding the AI trade and countered a large short position by Michael Burry. The beat may have prevented further downside for AI-focused stocks and could support a year-end recovery for the sector. The Nasdaq 100 experienced a notable pullback of over 6% from its peak, but renewed confidence in AI, along with new startup activity, provides catalysts for a potential market relief bounce.
Read at 24/7 Wall St.
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