Nvidia Earnings Considered More Important Than Powell’s Jackson Hole Speech: Barclays By Investing.com

As markets eagerly anticipate Nvidia’s (NASDAQ: ) upcoming earnings report, Barclays analysts warn that it could serve as a “reality check” for the broader market, particularly in the technology sector.

In a client research note, the bank underscores the importance of Nvidia’s earnings, due next week, in maintaining the momentum behind the AI ​​and technology investment narrative dominating the market through late 2022.

The enthusiasm around artificial intelligence, which gained traction after the launch of ChatGPT in November 2022, was supported by Nvidia’s “explosive earnings” in the first quarter of 2023.

According to Barclays, these results provided “hard evidence that the AI ​​theme could generate significant revenue growth.”

Since then, Nvidia’s earnings have consistently beaten expectations, leading both the tech sector and the broader market. However, Barclays warns that “anything less than another beat and raise” in Nvidia’s upcoming report “may prove to be a disappointment, with broader implications for the overall market.”

In parallel, Barclays is closely watching the speech of the chairman of the Federal Reserve, Jerome Powell, in Jackson Hole.

The speech is expected to “set policy expectations” as the market has already priced in an accommodative stance from the Fed.

The bank notes that with four rate cuts set by OIS swaps before the end of the year, the speech may not drastically change the current market outlook, but could influence near-term moves in rates and equities.

Barclays notes that while “the direction of travel is towards easier Fed policy,” much of this dovish sentiment is already being reflected in current market prices.

As such, the Jackson Hole event, along with Nvidia’s earnings, could be key in determining whether the market continues its current trajectory or faces a period of reevaluation.