Investors are zeroed in on Nvidia Corp.‘s (NASDAQ:NVDA) earnings this week as analysts say bullish forces could still drive a year-end tech rally despite recent profit-taking.
With Nvidia powering the AI boom and holding "half a trillion dollars" in future orders, market strategists argue the chances of a late-year equity melt-up outweigh fears of an AI bubble.
Nvidia and startup Menlo Micro said Wednesday that their collaboration has significantly accelerated the testing of AI chips, helping the semiconductor giant ease a major production bottleneck as demand continues to soar.
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Every Nvidia AI chip must undergo rigorous testing on a specialized circuit board to ensure it meets performance standards — including power and speed — before reaching customers. But while the graphics processing units or GPUs themselves represent the cutting edge of technology, many components on the test boards rely on decades-old designs, making it difficult to test high-power, high-speed chips efficiently.
To solve that challenge, Nvidia partnered with Menlo Micro, a GE-spinoff founded in 2016 that has raised $227.5 million from Corning Inc (NYSE:GLW) and the venture fund led by Apple Inc (NASDAQ:AAPL) iPhone co-creator Tony Fadell, Reuters reported. The company's metal-based microswitch chips — built using micro-electromechanical systems (MEMS) technology — boost the performance of the boards used to validate Nvidia GPUs.
Engineers at both companies reported in a newly published research paper that their solution cuts testing time by 30% to 90%, depending on the specific test.
Nvidia has been working to streamline manufacturing processes to keep up with orders. The company will report its quarterly earnings after Wednesday's market close, and analysts expect revenue to jump 56% to $56.9 billion, according to LSEG data.
The Nasdaq Composite fell 0.84% on Monday as investors sold off major technology stocks. Apple, Meta Platforms Inc (NASDAQ:META), and Oracle Corp (NYSE:ORCL) each slid more than 1%, and artificial-intelligence chip leader Nvidia performed even worse, dropping nearly 2%, CNBC reported.
Investors remain laser-focused on Nvidia ahead of its third-quarter earnings report on Wednesday. CEO Jensen Huang said in October that the company has "half a trillion dollars" in orders scheduled for 2025 and 2026, a comment that fueled huge expectations for future demand. Because Nvidia sits at the center of the AI boom — alongside OpenAI — any hint of slower-than-expected growth could hit the stock hard.
"If they offer even slightly muted guidance or forecast for chip demand, the market would take that poorly," Ross Mayfield, investment strategist at Baird told CNBC.
Even with recent profit-taking in tech over steep valuations and high spending, several analysts still expect stocks to rally into December.
Michael Graham, an analyst at Canaccord Genuity, wrote Monday that bullish and bearish forces remain balanced, but he still predicts a year-end upswing. HSBC's chief multi-asset strategist Max Kettner echoed that view, saying the chances of a late-year "melt-up" — especially in equities — outweigh the risk of an AI bubble bursting anytime soon.
NVDA Price Action: Nvidia shares were up 2.13% at $185.22 at the time of publication on Wednesday, according to Benzinga Pro data.
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