Nasdaq tumbles ahead of AI-darling Nvidia's results, Fed minutes
By Amruta Khandekar and Bansari Mayur Kamdar
(Reuters) -The tech-heavy Nasdaq led declines on Wall Street on Wednesday as investors braced for Nvidia (NASDAQ:NVDA)'s high-stakes earnings report that could hinder this year's AI euphoria if results are not stellar, and awaited minutes from the Federal Reserve's latest policy meeting.
Nvidia shed 1.9% after a more than 4% decline in the previous session ahead of the chip designer's quarterly earnings, expected after markets close on Wednesday.
The company is expected to post a more than three-fold surge in its fourth-quarter revenue on robust demand for its chips that dominate the market for artificial intelligence (AI).
But analysts have warned that Nvidia's lofty valuation could make it vulnerable to sharp declines if it delivers anything short of a blowout report, and also spark a broader selloff among technology firms that have benefited from bets on AI.
"(Nvidia) is seen as the lead company in the AI revolution," said Rick Meckler, partner at Cherry Lane Investments in New Jersey.
«With these elevated prices in the megacap tech space, there's clearly nervousness about any level of disappointment. Nvidia really needs to not only beat, but have a very strong forecast for it to reaccelerate to the upside.»
The chipmaker has jumped 37.4% so far this year, compared with 5.7% and 3.6% year-to-date gains in the Philadelphia Semiconductor Index and the Nasdaq.
Three of the 11 major S&P sectors were in the red, with rate-sensitive technology stocks down 0.9%, while energy shares outperformed with gains of 1.7%.
The AI-fueled rally on Wall Street this year ran into a rough patch after data last week hinted at sticky inflation and stoked concerns that the Federal Reserve could
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