CNBC Daily Open: We could still close the year with a rally despite AI slump

The Nasdaq Composite dropped 0.84% Monday stateside as technology stocks were under pressure, with Apple, Meta and Oracle retreating more than 1% each.

Artificial intelligence lynchpin Nvidia performed worse, losing almost 2%. CEO Jensen Huang in October said the chipmaker had “half a trillion dollars” of business on the books for 2025 and 2026. When Nvidia reports its third-quarter earnings Wednesday stateside, investors will be combing through Huang’s comments for signs of strong 2026 growth, as suggested by that data point.

The problem with promises or expectations, especially for a company that is one of the two around which the artificial intelligence universe orbits (OpenAI being the other), is that any disappointment will be disproportionately painful.

“If they offer any even slightly muted guidance or forecast for demand for their chips, the market would take that poorly,” Baird investment strategist Ross Mayfield said.

Despite the recent sell-off in tech over concerns about high valuations and capital expenditure, some analysts think we could still end the year with a rally.

 “We continue to see a balance of bullish and bearish signals heading into year-end, but our stance remains that a year-end rally is likely,” Michael Graham, analyst at Canaccord Genuity, wrote in a Monday note.

Likewise, HSBC’s chief multi-asset strategist Max Kettner on Monday said the bank thinks “the probability of a melt-up into year-end – particularly in equities – is much greater” than a potential AI bubble popping.

If their predictions prove true, investors will have much to celebrate during the festive season — and we can worry about AI in the new year.

Major U.S. indexes fall Monday stateside. Investors continued selling off technology names. Alphabet shares, however, rose on news that Berkshire Hathaway has taken a stake in it. Asia-Pacific markets tracked Wall Street, trading downward Tuesday.

‘Half a trillion dollars’ of business for Nvidia. CEO Jensen Huang said in October that the chipmaker has $500 billion in orders for 2025 and 2026 combined. Analysts think Huang is signaling a strong forecast for 2026 sales.

Divided outlook on a December rate cut. In prepared remarks on Monday, Fed Governor Christopher Waller said he is focused on the labor market “after months of weakening.” But Vice Chair Philip Jefferson said there is a “need to proceed slowly.”

India’s trade deficit in October smashes record. The surge in gold imports during Diwali and declining exports to the U.S. contributed to a $41.7 billion deficit, which was sharply wider than the $28.8 billion estimated by economists in a Reuters poll.

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