Nvidia Stock All-Time High
What is it?
Nvidia stock soared last Thursday, up nearly 25% from the previous day.* With a growing demand for AI-linked products and services, Nvidia projected second-quarter revenue to be nearly $4 billion over investors’ estimates.*
“The company anticipates a surge in demand for its AI chips that power chatbot sensation ChatGPT and other applications. Nvidia (NVDA) became the ninth public company and first chipmaker to ever hit a $1 trillion market valuation on Tuesday.”**
Why does it matter?
NVDA has performed well year to date, which points toward what the market is rewarding. At the moment, large technology companies and AI are favorites in the equity market. Those stocks are helping to hold up the ETFs they are a part of. We will see if this turns into a short-lived trade, or a trend that holds up over time. Many stocks have been much calmer than NVDA as the equity market has remained relatively stable in recent weeks.
Debt Ceiling Update
What is it?
There is an ongoing discussion by the U.S. government about a possible agreement to raise the debt limit in order to avoid defaulting .***
“U.S. President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy on Sunday signed off on an agreement to temporarily suspend the debt ceiling and cap some federal spending. Stocks on Wall Street closed mixed on Tuesday, pressured by worries about U.S. lawmakers opposed to a deal to raise the $31.4 trillion debt ceiling.”***
Why does it matter?
As a deal takes longer to be agreed upon investors could become more fearful of a default. The failure to pass the debt ceiling could be catastrophic to the markets. With the recent news, markets have held up well. Some stocks are at their highest price ever.**
We are confident in our positioning as the final decision on the debt ceiling is yet to be made. Should things turn out well there could be more optimism in the markets. However, The Fed may be more likely to raise interest rates again in June if markets go into that meeting on the rise.
Other articles we found interesting this week:
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The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach.
Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.
*Josh Schafer. “Nasdaq surges as Nvidia soars”. 5/25/2023. Yahoo Finance. https://finance.yahoo.com/news/nasdaq-futures-rise-as-nvidia-shares-soar-stock-market-news-today-115101195.html
**Ines Ferré. “Nvidia touches $1 trillion market cap as chipmaker rides AI wave”. 5/30/2023. Yahoo Finance. https://finance.yahoo.com/news/nvidia-touches-1-trillion-market-cap-as-chipmaker-rides-ai-wave-133530381.html
***Herbert Lash. “Shares close mixed, Nvidia’s 3% rise offsets debt ceiling jitters”. 5/30/2023. Reuters. https://www.reuters.com/markets/us/futures-rise-tentative-debt-ceiling-deal-2023-05-30/
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