Saad Ullah
⬤ Nvidia (NVDA) is back in the hot seat as Wall Street dials back risk exposure ahead of the company's earnings Wednesday and the delayed September jobs report Thursday. The S&P 500 looks set to break its six-month winning streak, with markets hungry for clarity on AI demand and Federal Reserve rate cut expectations. A look at 13F filings from 909 hedge funds reveals an unusually balanced stance on NVDA—161 funds boosted their positions in Q3 while 160 cut back, exposing a genuine divide in how institutional investors view the stock.
⬤ The bigger picture shows just how aggressive AI spending has become. Consensus capex estimates for major players like Amazon, Google, Meta, Microsoft, and Oracle keep climbing for both 2025 and 2026. Projections measured at the start of 2025, the beginning of Q3 earnings season, and today all point in the same direction: up. Companies are doubling down on AI infrastructure even as questions mount about returns.
⬤ That's where the skepticism creeps in. The concern isn't just about the size of these investments—it's about whether the business models can actually justify them. Big tech firms are increasingly turning to debt markets instead of burning through cash reserves as they race to build out AI capabilities. Credit markets are still open for business, but lenders are demanding higher premiums even from top-tier borrowers, a sign that the financial community is getting more cautious about the leverage fueling AI expansion.
⬤ Nvidia sits right at the intersection of all this optimism and doubt. The combination of rising spending commitments, shifting funding strategies, and a nearly 50-50 split in institutional positioning shows just how fragile sentiment has become. Wednesday's earnings could either restore confidence in the AI story or amplify concerns about spending levels, debt reliance, and whether momentum is starting to fade.
Saad Ullah
