Nvidia tonight, are they now more important than the Fed

Tonight, Nvidia reports its earnings; some commentators apparently consider the report more important than the Fed’s rate decision. Some investment opportunities often polarise opinion, and Nvidia is currently one of those. To buy now or not to buy that is the question, sorry Shakespeare. The bulls will have it that the growth in demand for AI chips is insatiable. The embodiment is that of Nvidia, so close your eyes and buy. Others believe that on 30 times forward sales and its reliance on Blackwell’s success make its current stock price unsustainable. Nvidia is not the only asset that has that Marmite effect. Bitcoin is another; as it hits record highs, as the price increases, so does the number of believers. Gold, again, probably for centuries, has divided opinion; those who believe that the world remains unstable and the only protection is the yellow metal, against those, Buffet being one, who don’t see its lure.

If Nvidia’s success or otherwise is more important than the Fed’s impact, then whether one physically owns Nvidia shares becomes a bit more of a moot point. One can argue that most of us who invest in the stock market are already exposed to Nvidia’s success or otherwise. If AI is the next leg of economic growth, then investors will already have an interest in Nvidia.  If one has exposure to many of the leading tech names on what are slightly less aggressive valuations, then one is invested in the success of Nvidia; if Nvidia falls, so will the NASDAQ. Bitcoin and Nvidia are, in some ways, similar; people see it as the future, and that’s why they want to own it, no matter the price, and they may be right.

The latest UK data confirmed inflation is back above the Bank of England’s 2% target, mainly due to higher energy prices. The headline rate came in slightly higher than markets predicted at 2.3%, and the core rate remains elevated above 3%. Weaker growth and higher prices, not a pretty picture make for Ms Reeves or Mr Bailey.

Lastly, I try to avoid politics, and this is not aimed in any one direction, but farmers went out in force yesterday to protest against the changes in legislation on inheritance tax; they may be defending a wider issue. Any government that tries to find ways to take away assets hard-earned by its population leaves a sour taste. One should be able to build assets without feeling, at any point, that those assets can be stripped from you by the incumbent government. I’m not sure that’s how a capitalist society is supposed to work.