Stocks Rise as Dip-Buyers Shrug Off Nvidia Woes

NVIDIA

Across the shows: 76 speakers in other episodes, 65 bullish and 26 bearish calls, past 30 days

• Shuli Ren · Bloomberg OpinionBearish

  Nvidia's vendor financing of AI customers and startups is a circular risk tied to its chip sales.

  Ren argues Nvidia is nicknamed the central bank of AI. It has backstopped hundreds of billions of dollars of venture financing for customers to buy Nvidia chips and invested tens of billions of equity into startups, especially newer cloud and data-center operators that lease Nvidia chips to AI labs. Ren says these efforts are meant to boost Nvidia's chip sales, and that those startups and customers are heavily reliant on Nvidia's financing channel, so the model is circular and fragile.

  “[He has] backstopped hundreds of billions of dollars of venture financing to its customers to help them finance the purchase of Nvidia chips.”at 2:43

• Shuli Ren · Bloomberg OpinionUncertain

  Nvidia is a family business with key-man risk and no CEO successor named.

  Ren says Huang owns under 4% of Nvidia but runs it like a family business. He has no successor, about 60 people report to him and all are asked to do what he decides, and his family works in the company. She calls him a key man, says the board faces a tough job, and says the board and senior executives have not put a succession plan in place. She declines to say whether he can survive the probe, calling it too early to speculate.

  “But I have to say that [Jensen Huang], even though technically he owns less than 4% of the company, [Nvidia] is kind of a family business. He doesn't have a successor.”at 3:55

• Shuli Ren · Bloomberg OpinionBearish

  Alleged Huang affair could open a backdoor for Chinese access to Nvidia's advanced chips; probe likely external.

  Ren cites the reported allegation that Huang's alleged lover, a woman identified as a suspected Chinese spy, could open a backdoor for Chinese companies to reach Nvidia's most advanced chips. She calls these very serious allegations and argues that an investigation is a matter of time and will not stay an internal company review, which points to external government scrutiny and risk for Nvidia. Her case rests on the allegations as reported, not on confirmed facts.

  “Jensen Huang's alleged lover possibly opening a backdoor for Chinese companies to get access to Nvidia's most advanced chips. These are very serious allegations.”at 7:29

AI infrastructure & data centers

• Kathy Bostjancic · Nationwide

  AI investment adds roughly 0.6 points to GDP growth via direct and wealth effects.

  Bostjancic estimates the direct effect of AI investment, net of imports, at about 0.2 to 0.3 points of GDP growth. An indirect wealth effect adds about 0.3 points, since rising equity values make people feel wealthier and spend more and save less. Together that is about 0.6 points of growth, roughly a quarter of the expected 2.3% growth next year. Her view is that a 5-10% equity pullback is not enough to move consumer spending, and that a sustained, meaningful equity decline would be needed.

  “So there's both, I think, the direct and the indirect impact. It's pretty sizable. So the direct impact when you subtract out imports, we think is probably around two to three tenths of GDP growth.”at 11:09

• Paul Christopher · Wells Fargo Investment Institute

  AI and data-center trends are strong long term, but near-term costs, war and regulation argue for patience.

  Christopher says AI and data centers are good trends in the medium and long term. Right now there are open questions about material costs, the war, and regulation of data centers. He calls these solvable issues that are not game changers and will not block the trend, but near term he advises patience. Last week's selloff was heavy fund selling, and he expects more downside before retail investors come in. His overall view is to play the trend without overpaying.

  “The problem is AI and data centers, they are really good trends in the medium and long term, but for right now there are questions about the cost of materials, about the war, and about regulation regarding the data centers.”at 17:15

US elections & politics

• Henrietta Treyz · Veda Partners

  Expect no massive policy change, since Democrats lack the 67 votes to override a Trump veto.

  Treyz says that although the midterm wave was enormous, the Democrats cannot reach the 67 votes needed to override a veto. President Trump has made it clear he will veto as needed. Democrats will pursue both legislative and investigative tracks, with investigations starting from affordability and corruption, so the result is a mix of everything rather than major policy change.

  “We shouldn't expect massive policy change just because even though the wave was enormous, it's not 67 votes that can override a veto.”at 27:12

• Henrietta Treyz · Veda Partners

  Hegseth faces bipartisan pressure and looks in trouble, especially in the House.

  Treyz argues there will be bipartisan support for going after Defense Secretary Pete Hegseth. Armed Services and Foreign Relations lawmakers have had problems with the Pentagon for two years, especially the last eight months without briefings on Iran, strategy, shipbuilding, munitions and veterans. Members who lost their seats are not coming back quickly, which adds to the pressure. She says it looks bad for Hegseth, especially in the House and then the Senate.

  “...there's gonna be bipartisan support for this. And then compounding the problem is that a lot of members are not gonna come back... So it's looking bad for Pete Hegseth at this point, especially on the house side for sure.”at 28:41

US growth & recession risk

• Kathy Bostjancic · Nationwide

  US economy is quite strong, with Q3 growth above 3% and a buoyant labor market.

  Bostjancic says the US economy is strong after third-quarter growth above 3%, with a possible cooling in the fourth quarter but still moderate growth. The October jobs report shows labor demand exceeding supply, unemployment falling and wage growth picking up, which supports consumers heading into the holidays. Growth is led by the consumer and AI investment. She expects growth of about 2.3% next year.

  “Well, first, I would just say the US economy is quite strong at this point. We came off of third quarter growth over 3%.”at 10:11

US inflation

• Kathy Bostjancic · Nationwide

  Headline US CPI heading to about 4% year over year; core inflation sticky near 2.5%.

  Bostjancic expects October core CPI to rise about 0.2% and headline about 0.3%, as gasoline rose after seasonal adjustment. Even with falling gasoline prices, she expects year-over-year headline CPI to trend up to 4%, because the government shutdown means no official year-over-year rates for October. She expects core to stay sticky near 2.5%. She says the Fed focuses on headline but worries about spillover from energy and food into other goods and services, and she is watching shelter inflation, which has ticked up.

  “even with some gasoline prices coming off a bit this month and even next month, we still see the year on year headline CPI trending up to 4%.”at 14:32

US consumer

• Kathy Bostjancic · Nationwide

  US consumer is in a solid position into the holidays, supported by jobs and wage gains.

  Bostjancic says the labor market is the key for consumers. The latest jobs report showed strong employment and wage growth, which gives decent income support heading into the holiday season. Home prices are still up a lot and equity prices are up over about two years. Even with some post-election pullback in chip stocks, households feel pretty good. She expects continued pretty good spending as long as people keep jobs and wages outpace inflation.

  “I think the consumer's in a pretty solid space here right now.”at 15:21

US stock market outlook

• Paul Christopher · Wells Fargo Investment Institute

  Stay neutral on tech; favor communication services, materials and industrials; S&P support near 7,000.

  Wells Fargo moved back to neutral or market weight on information technology in the S&P 500 in late September, which Christopher says was good timing. The approach is to buy sectors when they are cheap and sell as they get more expensive, based on twelve-month-ahead earnings. He likes communication services, materials and industrials. He would hold neutral on data centers and tech for now, and might dollar-cost average into them. He sees further downside with support in the S&P 500 around 7,000, versus the roughly 7,400 close on Friday.

  “We do see further downside with support in the S and P around 7,000.”at 18:13

US Treasuries & yields

• Paul Christopher · Wells Fargo Investment Institute

  Favor the short end of the Treasury curve; neutral on 3-7 years, unfavorable beyond that.

  Christopher likes the short end of the curve, which he says is attractive, including the 2s and 3s. He is neutral on intermediate maturities of three to seven years and unfavorable on longer maturities. The 10-year Treasury started the year around 4.1-4.2%, so long-dated holders are already down. He suggests harvesting that loss for tax purposes and redeploying the proceeds into the shorter end.

  “We really like the shorter end of the yield curve right now, and would be basically neutral on the intermediate term, let's say three to seven years and then unfavorable longer than that.”at 19:52

Credit markets

• Paul Christopher · Wells Fargo Investment Institute

  Like investment grade and longer-dated municipal bonds for tax-exempt duration; neutral on Treasuries.

  Christopher likes investment-grade credit and is neutral on Treasuries. He also likes municipal bonds, especially longer-dated ones such as 5- to 15-year munis. The tax exemption helps blunt duration risk, which makes longer maturities more attractive on an after-tax basis.

  “So we like investment grade and we're neutral on treasuries, but we also like munis here. And we would buy munis a little bit longer dated because you've got that tax exemption that helps blunt some of the duration risks.”at 20:44

Gold & precious metals

• Paul Christopher · Wells Fargo Investment Institute

  Gold faces rate-driven headwinds; long-term trend higher but little near-term outperformance.

  Christopher says gold is not a good short-term hedge for AI risk. The long-term trend is still higher, but interest rates are the headwind, since he expects rates to rise with about four more Fed hikes through 2027. He does not expect gold to outperform much over the next couple of months. He says it is a fine idea for a longer-term investor.

  “Because gold is gonna face some additional headwinds. We still think the trend is higher, but we think the headwinds here are gonna be from interest rates.”at 21:37

US rates & the Fed

• Paul Christopher · Wells Fargo Investment Institute

  Expects four more Fed rate hikes through 2027, since fewer would undermine Fed credibility.

  Christopher expects four more Fed rate hikes between now and the end of 2027, out of consensus at two or three. Consensus has moved from close to four hikes in September to about two, but he says the Fed cannot do only two and keep credibility. He expects enough inflation going into next year, especially in the first half before energy prices ease, which leaves the Fed little choice in early 2027 meetings but to hike.

  “Interest rates we think are gonna be on the rise. We're looking for four more Fed rate hikes between”at 21:37

Earnings & corporate profits

• Paul Christopher · Wells Fargo Investment Institute

  Earnings look good through 2027, but expectations must fall further on war, energy, rate and equipment costs.

  Christopher says the S&P 500 earnings picture looks good through 2027. The problem is that earnings expectations need to come down more. Headwinds include the war, energy costs, interest rates, and rising costs of industrial equipment for AI. Order books for chips and other industrial components are full into 2028, and supply chains need time to expand capacity, so investors should expect more headwinds in the short term.

  “The earnings picture does look good to us through 2027. The problem is the expectations for earnings have to come down a little bit more.”at 22:25

AI bubble & tech valuations

• Paul Christopher · Wells Fargo Investment Institute

  AI is not a bubble: earnings are real, unlike the dot-com era, but the build-out takes time.

  Christopher says the AI trend is not a bubble. Companies are actually reporting earnings, which unlike the dot-com era of the late 1990s and early 2000s. The problem is that building out data centers in every state and in DC takes large amounts of components, equipment, cement and wiring, so the trend will play out slowly. Expectations need to be adjusted to match that slower timeline.

  “Is this a bubble? We say no, it's not a bubble. You're actually seeing earnings. This isn't like the dot bombs of the late 1990s and early 2000s.”at 24:03

US deficit & government debt

• Henrietta Treyz · Veda Partners

  Reconciliation bill unlikely; debt ceiling hike needs a clear path or risks a fight and downgrades.

  Treyz keeps her 30% odds on a reconciliation bill, which she says is nowhere near moving. A debt ceiling hike is the most important topic for investors. It must happen either under one-party control with a clear path to an easy debt ceiling increase, or via a knockdown fight that could bring credit ratings downgrades before or after the fact. Watching the Senate Finance and House Ways and Means budget committees is the signal to look for a reconciliation bill that can raise the ceiling.

  “We must get a debt ceiling hike, and it either needs to happen with one party control... or we prepare for a knockdown, drag out fight that could include credit ratings agencies, downgrades beforehand.”at 30:08

Tariffs & trade policy

• Henrietta Treyz · Veda Partners

  Canada tariffs went too far and should be resolved; global tariff rates should return to 17-18%.

  Treyz says there is near unanimous agreement among Democrats and some Republicans that US tariffs on Canada went too far, so she expects them to be resolved. The USMCA was helped by the election, since the president may have tried to trigger withdrawal. Once Canada is cleared, a Section 301 investigation on excess capacity opens up, which should bring global tariff rates back to about 17-18%, the range before the Supreme Court ruling on February 20. She calls the picture a mixed bag, with more tariff action coming.

  “...then it opens up that second section three zero one investigation, which is on excess capacity and should be getting global tariff rates back to the 17, 18% range that we were in before the supreme court ruled on February 20.”at 31:25