Nasdaq 100 forecast: Stocks rebound ahead of more earnings

European indices recovered from a weaker start to turn positive by mid-morning trade, although US futures were still nursing small losses. Global indices were looking to add to their gains from the day before. Investors are weighing up encouraging earnings from SpaceX and Super Micro against elevated oil prices, which are limiting the upside for risk assets. We have more tech earnings coming up today which could shape the near-term Nasdaq 100 forecast.

 

SpaceX and Super Micro impress with earnings

 

The AI trade is showing signs of life again, with strong results from SpaceX and Super Micro helping to revive demand for AI-related hardware stocks. After last week’s concerns over the enormous cost of the AI buildout, investors have been given some fresh evidence that the spending boom is translating into stronger revenues and profits.

 

SpaceX shares jumped sharply in pre-market trading after Q3 earnings came in well ahead of expectations across the business. Net income reached $4.1 billion, compared with a $1.1 billion loss a year earlier, while revenue climbed to $14.6 billion, comfortably beating Wall Street estimates.

 

There is also plenty happening around Elon Musk’s broader AI ambitions. Musk said SpaceX and Tesla are studying a potential merger, describing the idea as having “a lot of merit”. A roughly $3.5 trillion combination would be unprecedented in scale, bringing electric vehicles, AI infrastructure, data centres, rockets and satellites under one corporate umbrella.

 

Meanwhile, Super Micro raised its quarterly revenue outlook by almost a third on strong AI demand, sending its shares around 15% higher after hours. That is particularly important for the market because Super Micro sits much closer to the physical infrastructure underpinning the AI boom, making its outlook a useful gauge of whether data-centre spending remains robust.

 

Tech stocks remain in focus after recent wobble with more earnings to come

 

While the AI trade may have been revived a little, it remains vulnerable as investors continue to assess whether the enormous capital being committed to it will ultimately generate adequate returns.

 

That makes the coming earnings season particularly important. Tesla, Meta and IBM are among the major US technology names reporting today. The market needs evidence that earnings growth can justify current valuations, rather than another round of optimistic commentary around AI spending.

 

AI spending versus higher oil prices

 

The results help address one of the biggest concerns hanging over the AI trade: whether the huge sums being committed to data centres, chips and computing infrastructure will ultimately generate adequate returns. For now, the latest earnings suggest demand remains strong enough to support the investment cycle.

 

The problem is that the macro backdrop is becoming less friendly. Brent crude is trading near $110 a barrel, keeping inflation risks elevated and making it harder for central banks to ease policy. Higher oil prices therefore risk offsetting some of the optimism coming from the AI earnings story, particularly if they reinforce expectations of further rate hikes.

 

So, while the earnings have given AI stocks a much-needed lift, the broader rally still faces a significant hurdle from rising energy prices and the resulting pressure on interest rates.

 

French bond spreads are also widening as investors become increasingly sceptical about the country’s ability to deliver meaningful fiscal consolidation.

 

Against that backdrop, it is difficult to make a convincing bullish case for equities. The next few days of earnings and geopolitical headlines could therefore prove important for determining whether the recent equity weakness returns or whether the market can start to put in a more a meaningful bottom.

 

Technical Nasdaq 100 forecast

 

The Nasdaq 100 broke below its bullish trend line on Friday last week, and so far this week, we’ve seen a little further downside.

 

 

In fact, the index was up around 1.5% at the time of writing this week, suggesting that some of the selling pressure has clearly eased. But the bulls are not quite back in control just yet.

 

For me, the index needs to reclaim the broken bullish trend line and move back above the 30,000 level to generate a more convincing bullish signal.

 

If that doesn’t happen, consolidation remains the key theme, and the index could move back down to retest the recent lows around 29,000.

 

So, the market is not out of the woods just yet.

 

On the downside, one key level to watch is 29,240, which marks the base of the previous breakout in mid-September. Below that, 29,000 is an obvious psychological level, followed by the September low at 28,745.

 

That was the last significant low before the latest leg higher, so if it breaks, we could see the start of a much larger correction. For me, that’s the line in the sand.

 

On the upside, 30,000 is a key resistance area, with the underside of the broken trend line also converging around that zone.

 

Above there, we have 30,370 as the next potential resistance level, followed by the June high at 30,756.

 

That level provided resistance initially, before the index eventually broke above it. But that breakout later failed to hold, turning the June high back into an important resistance level.

 

So, that’s another level I’ll be watching closely.

 

Above 30,756, there isn’t much in the way of significant resistance, which would leave the door open for fresh all-time highs.