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Weekly AI Bubble Watch: Why Nvidia Roared Back

After Japan’s Black Monday moment set this week’s technology sector lower, Nvidia (NVDA) reversed course on Thursday. NVDA stock roared back, rising by 6.13% to lead the AI-related suppliers higher.

Broadcom (AVGO) gained 6.95%, Qualcomm (QCOM) rose by 5.66%, and AMD (AMD) gained 5.95%. Even Intel (INTC), the out-of-favor semiconductor supplier, gained 7.9% on Thursday.

On Wednesday, Piper Sandler called Nvidia a tremendous opportunity. Analysts also dismissed a report that Nvidia’s faster, lower-power-consuming chip, Blackwell, would face delays. Nvidia already said that Blackwell is on schedule. However, the firm is shipping this chip in limited quantities.

Over 40% of Nvidia’s revenue depends on Amazon (AMZN), Alphabet (GOOG), Meta Platforms (META), and Microsoft (MSFT).

The AI stocks also benefited from weak Thursday’s weekly jobless claims. Fewer Americans applied for unemployment benefits in the previous week. Initial claims fell 17,000 to 233,000 (seasonally adjusted) for the week ended Aug. 3. The report hurt the 20+ Year Treasury Bond (TLT). TLT stock peaked at $100.00 only days ago, closing at $95.32.

The claims report also contradicts fears that the labor market is weakening sharply. In addition, the economy is not in a recession. As a result of this data, the Fed may not cut rates in September. If it does, it will not be more than 25 bps.