S&P 500 futures were up 0.14% this morning after the index closed up 0.77% yesterday, a sign that traders feel that Monday’s 1% decline on fears that AI will trigger an economic doom cycle was overcooked.
Instead, the stock markets are looking forward to Nvidia’s Q4 2025 earnings call this evening. Nvidia has the largest market cap in the world ($4.7 trillion); it makes the high-end chips that the AI revolution depends upon; it earns more revenue from AI-related clients than any other company; and it is a big investment funder of the AI ecosystem. Which is to say, its earnings will definitely move markets after the closing bell today.
“We will … be able to hear a pin drop on Street trading desks as the entire global market will be carefully watching these results and commentary,” Dan Ives at Wedbush told clients. “We fully expect the leading supplier of AI chips will comfortably exceed estimates and guide above Street [forecasts] given continued positive data points through 4Q as well as seemingly healthy spending set up through 2026.”
ING was a little more anxious. “It looks tentative ahead of today’s high‑stakes Nvidia earnings. With some investor unease around AI stocks still lingering, Nvidia will probably need to beat consensus and offer strong guidance to provide meaningful reassurance. At this stage, the downside risks to global risk sentiment from a miss appear larger than the upside from a beat,” Francesco Pesole said in a note to clients.
Tech stocks remain in a fragile state. The Nasdaq Composite is down 1.63% year to date compared with the S&P 500, which is up 0.65%.
Bespoke Investment Group published a chart showing a new “AI doom basket” that includes 55 large-cap stocks that have recently been punished by AI headlines. This basket is now trading down to levels last seen in April at the “‘tariff tantrum’ lows for the S&P 500” last year, the group said.
The best characterization of that fragility came from Xiao Lei, head of research and chief economist at Hong Kong–based Kasikornbank, who was quoted in the South China Morning Post describing U.S. investors’ willingness to sell off in fear of AI like this:
“If you see a strong man suddenly break down in tears in a restaurant because there’s no chili sauce on the table, you immediately understand that he must have been holding back those tears for a long time.”
More seriously, Goldman Sachs noted that capital expenditures (capex) by the AI hyperscalers is now estimated to be $667 billion in 2026, up 62% from the year before. That crosses a threshold established by the dotcom bubble of the late 1990s.
“Hyperscaler capex is now on pace to exceed 90% of cash flows this year, above the share during the dotcom boom,” Ryan Hammond and his colleagues told clients.
“A deceleration in the quarterly growth rate is likely in late 2026. The revenue growth and valuations of some AI infrastructure stocks appear vulnerable to a slowdown in capex growth. Even where rallies have been driven entirely due to earnings, the recent dislocation between [Nvidia] price and earnings shows the challenges of delivering persistently strong returns amid fears of ‘over-earning.’”
Here’s a snapshot of the markets this morning prior to the opening bell in New York:
- S&P 500 futures were up 0.14% this morning. The index closed up 0.77% in its last session.
- The STOXX Europe 600 was up 0.55% in early trading.
- The U.K.’s FTSE 100 was up 0.95% in early trading.
- Japan’s Nikkei 225 was up 2.2%.
- China’s CSI 300 is up 0.6%.
- The South Korea KOSPI was up 1.91%.
- India’s Nifty 50 was up 0.23%.
- Bitcoin rose to $65.4K.
