①NVIDIA CEO Jensen Huang and Federal Reserve Chair Powell are key figures influencing the year-end trend of the U.S. stock market; ②NVIDIA's upcoming Q3 fiscal year 2026 earnings report has drawn significant attention, with investors hoping to find evidence of healthy development in the AI ecosystem; the Fed’s interest rate cut decisions also have a crucial impact on financing for artificial intelligence companies and stock market trends.
AI trading, and even the year-end outlook for U.S. stocks, may hinge most on two individuals—NVIDIA CEO Jensen Huang and Federal Reserve Chair Powell. Investors will soon receive NVIDIA's "report card" at 4 a.m. Beijing time on Thursday. $NVIDIA (NVDA.US)$ Jensen Huang will also speak during the earnings conference call.
NVIDIA’s 'Report Card'
The release of this Q3 fiscal year 2026 earnings report is critical for stabilizing the ship of artificial intelligence for all investors, who hope to find evidence that the AI ecosystem is developing in a healthy direction. Ryan Lee, Senior Vice President of Products and Strategy at Direxion, a U.S.-based financial product provider, stated that the market would pay close attention to NVIDIA’s outlook for the next quarter.
Jensen Huang revealed at NVIDIA’s GTC conference in October that combined orders for AI core chips in 2025 and 2026 had reached $500 billion, with 30% already shipped. This revelation has made some analysts more “greedy,” starting to anticipate whether the trend for 2027 could be equally robust.
As large technology stocks significantly influence the market-cap weighted S&P 500 Index, NVIDIA’s report will also carry considerable importance in other aspects. Louis Navellier, founder of Navellier & Associates, noted in his latest report that pressure on the “Mag 7” stocks has led to “substantial volatility in index prices,” making NVIDIA’s earnings report “pivotal in turning things around.”
Moreover, NVIDIA’s commentary could help alleviate Wall Street’s concerns about high valuations in the technology sector. Navellier stated that he was “not worried about valuations” and anticipated that the sell-off would “gradually fade sooner or later.”
James Demmert, Chief Investment Officer at Main Street Research, commented, “The bubble continues to expand at a healthy pace, with no signs of bursting anytime soon.” He noted that while valuations appear expensive, the share prices of top-tier companies are “below their earnings growth rates,” and “overall sentiment in the AI market remains moderately bullish rather than overly optimistic.”
Lee pointed out that the market is already aware of the scale of AI spending following the earnings reports from hyperscale companies. However, NVIDIA's earnings report "will serve as a good thermometer" to show how the market leader has "truly captured the massive expenditures these hyperscalers have reported."
He also mentioned that NVIDIA’s earnings report would be “the last major broad catalyst” before the Federal Open Market Committee (FOMC) meeting on December 10, making it a “good indicator” for gauging market movements from post-Thanksgiving through early December.
Lee also emphasized that any comments by Jensen Huang on the depreciation lifespan of NVIDIA chips could have a ripple effect on the market. If Huang reiterates that NVIDIA’s graphics processing units (GPUs) have a longer depreciation lifespan, investors may become more willing to invest in a broader range of hyperscale equipment.
Federal Reserve Decision
Another 'key player' influencing the year-end trend of the U.S. stock market is undoubtedly Powell. Clearly, if the Federal Reserve does not cut interest rates as quickly as expected, it will be harder for artificial intelligence companies to borrow money and fund their ambitious projects. This trend has weighed not only on more speculative AI stocks but also on companies with stronger capital positions.
Lee explained that growth-focused companies 'will always be somewhat more sensitive to rate cuts, for better or worse.'
'If interest rates remain high, some hyperscale companies will find it more difficult to continue borrowing,' he said. 'This is why investors are paying such close attention to the Federal Reserve’s December meeting and its subsequent moves.'
Lee stated that persistently high interest rates mean hyperscale companies will have to continue relying on cash flow from their core businesses. While debt financing 'isn’t always a bad thing,' this dynamic could significantly weigh on hyperscale cloud computing stocks if the market perceives ongoing demand for debt without interest rate cuts.
He also attributed the recent sell-off to 'hawkish comments' made by Federal Reserve officials ahead of the meeting.
Charlie Ripley, Vice President of Portfolio Management at Allianz Investment Management, stated that he believes the market expects the terminal rate to reach 3% at some point next year. The focus now is on how soon this will occur, which has led to some recent volatility in the stock market.
Following two consecutive rate cuts, the current U.S. federal benchmark interest rate stands at 3.75-4%.
'When the market no longer views a December rate cut as a sure thing but rather as a coin toss, this will impact the stock market in the short term,' Ripley said, adding that overvaluation could be another reason for investors pulling back.
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