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NVIDIA crushed earnings estimates and raised guidance once again, even while noting that it expects essentially zero sales to China over the next two quarters – a development that anyone familiar with the earnings-estimate game saw coming from a mile away.
What caught most people off guard wasn’t the headline beat, but the violent intraday reversal: a sharp gap higher followed by heavy selling that dragged the entire market lower. Meanwhile, Google (Alphabet) continues trading near all-time highs, up nearly 60% year-to-date. The market has clearly crowned its AI winner – for now.
This feels eerily similar to the DeepMind moment earlier this year, when one breakthrough player’s success was expected to cast a shadow over the rest of the AI ecosystem. The bigger question is whether Google’s aggressive plans to keep doubling its compute and building out massive AI infrastructure will actually require massive ongoing purchases of GPUs and related gear from NVDA, AMD, AVGO, TSM, ANET, MU, and others. In short: don’t be so quick to write off the rest of the AI supply chain. This pullback could very well turn into another attractive buying opportunity in the not-too-distant future.
Despite the recent damage, the broader bull market is not over yet. Both QQQ and SPY successfully tested and held above their rising 20-week moving averages – a level that has served as reliable support multiple times during strong bull runs in the past. This zone remains critical to watch. A decisive break below last week’s lows would put SPY at risk of a deeper 10% correction toward the 600–610 area.
In the meantime, the biotech sector is acting as if the rest of the market’s weakness doesn’t exist. I can’t fully explain the extraordinary relative strength in what is normally one of the riskiest and most volatile parts of the market. If you’re scanning for stocks acting constructively near their multi-month highs, an unusually large number of them are small- to mid-cap biotechs that most investors have never heard of: JAZZ, SNDX, BBNX, TEVA, ADPT, TXG, LQDA, and others.
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