Global investors battle between long- and short-term wins amid Nvidia volatility
Global investors are bracing for a battle between long and short-term wins amid a dramatic sell-off in artificial intelligence-related stocks.
AI darling Nvidia buoyed an otherwise deflated market when it reported strong earnings after the bell on Wednesday, sending its own stock soaring and carrying related names alongside it. However, the rally quickly reversed on Thursday with Nvidia ultimately ending the trading session 3% lower.
While the U.S. chipmaker’s earnings initially appeared strong enough to quell concerns over an AI bubble, economic speculation put global investors back on the defensive as hopes dimmed of a December rate cut by the Federal Reserve. The U.K.’s hotly anticipated Autumn Budget is also expected next week.
Asia-Pacific markets fell Friday, led by tech heavyweight SoftBank, which plunged more than 10%. European stocks followed suit with a negative open. Stateside, however, appetite may have already reversed – again – as futures rose.
“I think the market is quite confused as to why this is happening,” Ozan Ozkural, founding managing partner at Tanto Capital Partners, told CNBC’s “Squawk Box Europe” on Friday.
Market moves this year have been driven by sentiment, momentum, AI and innovation, “with sprinkles of geopolitical risk,” he said. “Although we haven’t got a specific reason why there has been a sell-off on the back of the strong Nvidia results, to me it’s not that surprising, because [it’s] only a matter of time until sentiment just shifts, because we just live in a much more uncertain world.”
There also doesn’t need to be a catalyst, he added. However, the “most dangerous place we can be at” is a sustained sell-off, even if it’s a slow burn, Ozkural warning, noting that this could lead portfolio managers to lock in gains and cash out.
Asset managers are driven by compensation cycles which is why they don’t like to hedge their bets, he said. “No one cares about the long term. Everyone is dead in the long term. No one even cares about the medium term. It’s all about short term cycles,” he said.
“But the reality is, it’s year end, people need to get paid their bonuses, and it doesn’t pay to be bearish unless we see a sustained level of a sell-off.”
Investors with cash in an AI ETF or index may be cashing out due to a mixture of year-end risk management and continued concerns over an AI bubble. Those who may have made a lot of money on the back of the AI trade will probably want to step back and sell, said Stephen Yiu, investment chief at Blue Whale Growth Fund, which has a position in Nvidia.
However, for Julius Bendikas, European head of macro and dynamic asset allocation at Mercer, “it’s the battle between the solid fundamentals and questions being raised about multiples and maybe positioning getting a touch stretched.”
Despite solid fundamentals and earnings exceeding expectations, Bendikas told CNBC’s “Europe Early Edition” that investors are now starting to question whether the price is right and have started to sell as a result.
On technicals, “arguably, a lot of people have rushed into equities,” he said, noting that a recent Bank of America survey found cash levels are low. “So people have been quite long equities, maybe too long equities. And I think what we’ve seen yesterday is the valuations and technicals [narrative] overpowering the fundamental narrative, which came in quite strong post the Nvidia earnings overnight, a day ago.”
Nick Patience, AI lead at The Futurum Group, added: “Investors are also concerned about the circular nature of deals between Nvidia and other ecosystem players, questioning whether massive capital expenditures from hyperscaler customers represent sustainable demand.”
Fed rate cut
The moves may also reflect economic pressure. “The [Thursday] afternoon decline coincided with some negative macroeconomic signals in the form of the delayed September jobs report released in the morning that showed the US economy added 119,000 jobs – more than the expected 50,000 – but the unemployment rate rose to 4.4%, the highest level since October 2021,” Patience said.
The last bit of big news the market is expecting is the Fed’s December rate decision; investors had anticipated a cut but are now split on whether it will happen.
The central bank opting to not cut rates is “not an issue,” Yiu said, but could lead investors who had expected it to cut, to pause and recalibrate ahead of next year.
“I think people just want to probably lock in and derisk, and take a break from [President Donald] Trump as well, who knows what Trump is going to next,” he added.
Amid the hype, it’s difficult to work out the AI winners and losers, Yiu said, but he expects a differentiation between the companies investing in AI and those on the receiving end of that cash, which he called AI infrastructure. As the market shakes out, Yiu is placing his bets on the latter.
The VC arms of Google and Nvidia have invested in Swedish vibe coding startup Lovable’s $330 million Series B at a $6.6 billion valuation, the company announced on Thursday.
The news confirms an earlier story from CNBC, which reported on Tuesday that Lovable had raised at that valuation, trebling its valuation from its previous round in July, and that the investors included U.S. VC firms Accel and Khosla Ventures.
CapitalG, one of Google’s VC divisions, and Menlo Ventures led the round. Alongside Accel and Khosla, Nvidia venture arm NVentures, actor Gwyneth Paltrow’s VC firm Kinship Ventures, Salesforce Ventures, Databricks Ventures, Atlassian Ventures, T.Capital, Hubspot Ventures, DST Global, EQT Global, Creandum and Evantic also participated.
The fresh funds take Lovable’s total raised in 2025 to over $500 million.
“Lovable has done something rare: built a product that enterprises and founders both love,” said Laela Sturdy, managing partner at CapitalG in a statement accompanying the announcement.
“The demand we’re seeing from Fortune 500 companies signals a fundamental shift in how software gets built.”
Lovable’s platform uses AI models from providers like OpenAI and Anthropic to help users build apps and websites using text prompts, without technical knowledge of coding.
The startup reported $200 million in annual recurring revenue (ARR) in November, just under a year after achieving $1 million in ARR for the first time. It was founded in 2023 by Anton Osika and Fabian Hedin.
Vibe coding startups have seen big interest from VCs in recent times, as investors bet on their promise of drastically reducing the time it takes to create software and apps.
In the U.S., Anysphere, which created coding tool Cursor, raised $2.3 billion at a $29.3 billion valuation in November. In September, Replit hit a $3 billion price tag after picking up $250 million and Vercel closed a $300 million round at a $9.3 billion valuation.
The Micron logo is seen displayed at the 8th China International Import Expo.
Sheldon Cooper | Lightrocket | Getty Images
Micron Technology‘s stock jumped 15% after the company signaled robust demand for its memory chips and blew away fiscal first-quarter estimates.
During an earnings call with analysts, Micron, which makes memory storage used for computers and artificial intelligence servers, said data center needs have fueled greater demand for its products.
Micron said it expects the total addressable market for high-bandwidth memory to hit $100 billion by 2028, growing at a 40% compounded annual growth rate. Management also upped its capital expenditures guidance to $20 billion from $18 billion.
“We are more than sold out,” said business chief Sumit Sadana. “We have a significant amount of unmet demand in our models and this is just consistent with an environment where the demand is substantially higher than supply for the foreseeable future.
Micron topped Wall Street estimates for the fiscal first quarter and issued blowout guidance.
The company reported adjusted earnings of $4.78 per share on $13.64 billion in revenue, surpassing LSEG estimates for earnings of $3.95 per share and $12.84 billion in sales.
Revenues in the current quarter are expected to hit about $18.70 billion, blowing past the $14.20 billion expected by LSEG. Adjusted earnings are forecast to reach $8.42, versus expectations of $4.78 per share.
JPMorgan upped its price target on the stock following the results, citing the favorable pricing setup, while Bank of America upgraded shares to a buy rating.
Morgan Stanley called the results the best revenue and net income upside in the “history of the U.S. semis industry” outside of Nvidia.
“If AI keeps growing as we expect, we believe that the next 12 months are going to have broader coat tails to the AI trade than just the processor names and memory would be the biggest beneficiary,” analysts wrote.
WATCH: Micron shares spike on better-than-expected quarterly results
Micron year-to-date stock chart.
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