Nvidia Pare Losses Despite Additional Decline… CEO Risk Partially Priced In
Rising Yields Burden Tech Stocks… Focus Shifts to Nvidia Earnings Next Week
Key Market Trends
1. Nvidia Extends Decline… Digesting Resignation Shock
US equities closed mixed driven by weakness in Nvidia and rising Treasury yields. Six sectors including consumer staples and energy advanced, while five sectors including technology, consumer discretionary, and industrials declined.
Nvidia extended losses following the resignation of Jensen Huang. While multiple analysts estimated that the departure of the founder could trigger a stock correction of around 20%, similar declines had already materialized, limiting further sell-offs.
The absence of a confirmed succession plan remains a burden, particularly given that Jensen Huang maintained an organizational structure where roughly 60 executives reported directly to him, coupled with his heavy influence on new contracts and supplier relations.
Conversely, projections suggest that existing contracts and product roadmaps will remain intact, with no immediate major disruptions expected for Asian supply chains such as TSMC and Samsung Electronics. Amid a roughly 38% decline from its peak, strong retail bargain-hunting inflows were also observed in Nvidia shares.
2. Semiconductor Weakness on Rising Yields
The US Producer Price Index (PPI) for October rose 0.3% month-on-month and 6.5% year-on-year, coming in slightly below consensus forecasts of 0.4% and 6.6%, respectively. Core PPI matched expectations, rising 0.3% month-on-month and 5.0% year-on-year.
Although figures fell within expectations, the underlying inflation level remained elevated. Continued inflation-wary remarks from Federal Reserve officials pushed Treasury yields higher, weighing on technology stocks.
AMD, Micron, Intel, and major semiconductor equipment makers traded lower. In contrast, select mega-cap tech stocks including Apple, Microsoft, and Meta advanced, showcasing stock-specific divergence.
3. Earnings Outlook Maintained… Next Week Serves as a Test
Despite managerial risks at Nvidia, the outlook for AI investments remains largely unchanged. Hyperscalers and neo-cloud providers continue their spending, and market assessments indicate that component procurement remains a more critical variable than current Nvidia shipment volumes.
Nvidia's earnings announcement is scheduled for next week. The market is expected to scrutinize earnings and guidance, as well as whether any changes have occurred to existing contracts and product roadmaps following the leadership transition.
Market Analyst Perspective
Jensen Huang's resignation represents a major variable for Nvidia, but it has been largely priced in during the recent stock correction. The market is now transitioning from focusing on the CEO change itself to verifying actual earnings and business changes.
Interest rates present another variable. The fact that Treasury yields rose even though inflation indicators did not significantly exceed expectations poses a hurdle for a tech stock rebound. Even if Nvidia-related issues subside, elevated interest rates could sustain volatility in growth stocks.
The domestic market is showing signs of moving past the recent massive liquidation phase. For next week, the critical factor will not be short-term fluctuations in US semiconductor stocks, but rather whether foreign capital inflows into Samsung Electronics and SK hynix deteriorate again.
Checkpoints for Next Week
Nvidia: Earnings, guidance, and post-leadership transition business changes
Semiconductors: Foreign supply and demand dynamics for Samsung Electronics and SK hynix
Interest Rates: Persistence of the upward trend in US Treasury yields
Supply and Demand: Recovery potential of former leading stocks and institutional accumulation targets
Source: Market Analyst Stock Story (t.me/shmstory)
YouTube: Market Analyst TV www.youtube.com/@blueoak1004
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