Nvidia Eases AI Bubble Concerns

Good Afternoon. Markets sold off this week, with major indices all falling about 2% with tech-heavy Nasdaq falling the most. Strong Nvidia results were unable to reverse the tide for more than a few hours. The rise in volatility is attributed to a comeback in Yen carry trade fears and uncertainty around the December rate cut. All major companies’ results reported this week remain good, including decent macro data.

Below are the key things to note this week:

Volatility Surge: The VIX index surged this week to its highest levels since the April tariff panic amid AI bubble fears. However, the VIX fell by 11% on Friday. Unless there is any major issue next week, VIX should continue to normalise in the coming days.

Carry Trade 2.0: This week’s “carry trade 2.0” chatter centers on renewed stress around yen-funded leverage and the risk that a stronger JPY could force a partial unwind across global macro books. The move reflects a broader shift in funding dynamics as markets recalibrate rate-cut expectations and volatility edges higher, tightening the conditions that made the trade attractive through most of the year. With positioning stretched and policymakers signaling discomfort with currency weakness, traders are watching USD/JPY closely as even minor reversals can amplify liquidations across EM FX, rates, and equity exposures.

Nvidia Results: Nvidia’s Wednesday earnings beat-and-raise did little to revive tech sentiment, with management instead highlighting rising geopolitical risk tied to China. CFO Colette Kress said sizable purchase orders “never materialized” due to geopolitics and intensifying competition in China. Aaron Ginn of Hydra Host warned that Western attitudes toward Chinese AI pose the biggest threat to Nvidia’s leadership, noting that China’s manufacturing edge must be met with renewed U.S. competitiveness.
 

For the week:

• The S&P 500 is down 1.95%, the Nasdaq is down 2.74%, and the Dow 30 is down 1.91%.

  

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CNN's Fear & Greed Index now stands at 11 (Extreme Fear) out of 100, down 10 points from last week. Details here

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Liquidity: 

• Banking Reserves + ON RRP: Good news - banking reserves are up by over $100 billion since last week and are at ~$2.9 trillion. ON RRP balance remains immaterial.

• Standing Repo Facility (SRF): No significant increase in the SRF balance. Last month's end saw SRF usage rising to ~$30 billion, indicating funding pressure. It will be essential to see how this month ends. Considering banking reserves are trending up again, this month-end should be better than the October end.

Here is a summary of this week’s key economic releases:

Target Rate Probabilities for June 18th FOMC Meeting:

CME FedWatch

Walmart Moves to Nasdaq: The retail giant said it will move its long-time NYSE listing to Nasdaq, even citing AI as a factor in its decision to align with the tech-heavy exchange. The shift, involving a company valued at roughly $852 billion, is the largest exchange transfer on record and a major win for Nasdaq over its crosstown rival. Walmart is currently the NYSE’s fourth-largest listing by market value. Read

Cloudflare Outage: Cloudflare reported a global network disruption early Tuesday that affected multiple websites and apps. The company said most issues were resolved by 9:30 a.m. Eastern, and by 12:45 p.m., operations had returned to normal. Read

Meta Wins: Meta cleared a major threat on Tuesday after a US judge ruled it does not hold a social-networking monopoly. The FTC’s case argued that Meta ran a “buy or bury” strategy that could have forced divestitures of Instagram and WhatsApp — including the $19bn WhatsApp deal in 2014. Losing either platform, one driving roughly half of Meta’s revenue and the other the world’s most-used messaging app, would have posed an existential risk to the company. Read

Anthropic Valuation: Microsoft announced new partnerships with Nvidia and Anthropic, signaling a push to reduce reliance on OpenAI. Under the deal, Microsoft will invest up to $5B in Anthropic, while Nvidia will commit up to $10B. These investments lift Anthropic’s valuation to roughly $350B, up from $183B in September, according to a source familiar with the negotiations. Terms of the next round are still being finalized. Read

Home Depot Mixed: Home Depot’s Q2 revenue rose 2.8% to $41.4B. Comps were up 0.2%, below expectations, with roughly $900M from the recent GMS acquisition contributing eight weeks of sales. Comparable transactions fell 1.6%, while the average ticket increased 1.8%. Total transactions declined 1.4% to 39.5M, and the total average ticket rose 2.0% to $90.39.

PDD Mixed: PDD reported strong Q2 results, with revenue up 8.7% to $14.5B, driven by higher online marketing and transaction services. Cost of revenue jumped 36% on fulfillment, bandwidth, and payment-processing costs, while operating expenses rose 5% on higher marketing spend. Non-GAAP operating profit fell 21%, but EPADS came in at $3.08, beating estimates and improving from last year.

Nvidia Beat: The company posted earnings of $1.30 per share on $57.01B in revenue, up 62% year-over-year and ahead of expectations. Data center revenue surged 66% to $51.2B, beating estimates. Automotive hit $592M (+32%), professional visualization reached $760M (+56%), and gaming delivered $4.3B (+30%). Adjusted gross margin was 73.6% for the quarter. 

TJX Beat: The retailer delivered 5% comparable sales growth in Q3, beating the 3.6% estimate, with revenue up 7% YoY to $15.1B. Marmaxx comps rose 6%, HomeGoods 5%, Canada 8%, and International 3%. Gross margin expanded to 32.6% from 31.6%, while SG&A increased to 20.1% from 19.5%. EPS came in at $1.28, above consensus and last year’s $1.14.

Lowe’s Mixed: Q3 Non-GAAP EPS came in at $3.06, beating estimates by $0.11, while revenue of $20.81B rose 3.2% but fell slightly short. Comparable sales edged up 0.4%, supported by 11.4% online growth, strong home-services demand, and steady Pro momentum. As of Oct 31, 2025, the company operated 1,756 stores totaling 195.8M square feet of selling space.

Palo Alto Networks Beat: For the period ending July 31, the firm posted adjusted earnings of $0.95 per share on $2.5B in revenue, up 16% year-over-year. Product revenue grew 19% to $573.9M, while subscription and support rose 15% to $1.96B. Next-generation security ARR reached $5.6B, ahead of estimates. The company closed the period with $6.3B in deferred revenue and $15.8B in remaining performance obligations.

Walmart Beat: Q3 GAAP EPS came in at $0.62, a slight beat, with revenue at $179.5B, up 5.8% and ahead of expectations. Global eCommerce rose 27% across all segments, and U.S. comp sales grew 4.5%. For Q4 FY26, consensus looks for $186.9B in revenue and $0.73 in non-GAAP EPS. Full-year FY26 estimates stand at $701.2B in revenue with 3.96% growth and non-GAAP EPS of $2.61.