Nasdaq 100 forecast: Tech stocks shine as Nvidia results underpin AI trade

Much of this week’s attention has been on Nvidia’s earnings, and the chipmaker delivered the sort of numbers of investors had been hoping for. US index futures initially wobbled before moving higher overnight, with the results providing a fresh lift to the AI trade. The focus now shifts to Fed Chair Kevin Warsh’s keynote speech at the Jackson Hole summit on Friday. For now, the Nasdaq 100 forecast and market sentiment remain positive.

 

Nvidia reassures investors

 

Nvidia shares rallied after an initial wobble after the company’s latest results and upbeat revenue guidance reassured investors that demand for AI infrastructure remains robust.

 

The stock was up around 7% in pre-market trading. Interestingly, Nvidia has fallen the day after reporting earnings in each of the past four quarters, despite consistently meeting or beating expectations. Will it buck that trend this time around?

 

Indeed, this time, the numbers were difficult to argue with. Adjusted earnings per share came in at $2.22, ahead of the $2.10 consensus estimate, while revenue reached $96.22bn against expectations of $92.17bn. The strength of the report has also lifted the broader semiconductor complex, with chip stocks rallying in premarket.

 

Some investors had begun to question whether the AI trade was running out of steam, but for now at least Nvidia’s results has offered some welcome reassurance.

 

Powell to take centre stage at Jackson Hole

 

The odds of a rate hike in September have been falling after the release of mostly weaker US data in recent months. Still some questions remain about whether the Fed will hike anyway in September.

 

Yesterday’s economic data offered little reason for investors to become significantly more confident either way. Core PCE, the Fed’s preferred measure of underlying inflation, rose 0.2% month on month and 3.3% year on year, more or less in line with expectations. The disinflation process is therefore still intact, but progress remains frustratingly slow, and oil prices are consolidating at elevated price levels amid the US-Iran stalemate.

 

For now, markets remain relatively comfortable with the prospect of the Fed leaving rates unchanged on 16 September. That would provide a reasonably supportive backdrop for equities. But there is still plenty of time for that conviction to be tested.

 

This makes Warsh’s Jackson Hole speech particularly important. Even with Nvidia giving the AI trade another shot in the arm, investors may be reluctant to add aggressively to equity exposure ahead of what could prove to be an important signal on the Fed’s policy outlook.

 

Technical  Nasdaq 100 forecast and key levels to watch

 

From a technical perspective, the Nasdaq remains in an overall consolidation phase following its recent decline from the psychologically important 30,000 area, where a bearish trendline has emerged. That said, the downside has been limited, meaning the overall bullish structure is still intact. Following Nvidia’s results, the Nasdaq 100 has also moved back above its 21-day exponential moving average.

 

 

Support is now seen around 29,350-70 area on our US Tech 100 chart, which is derived from the underling Nasdaq 100 futures, marking the highs from recent daily candles. Below that, 29,180ish is the next level of support. But if we see a sustained break below the psychological level of 29,000, which is also roughly yesterday’s low, this would be the first meaningful warning signal. In that scenario, the next area of interest would be around 28,800, followed by 28,200.

 

On the upside, 30,000 remains the next major hurdle. A clean break above it would bring the recent local high around 30,245 into focus. Clearing that level would invalidate the bearish trendline and strengthen the bullish technical picture, potentially paving the way for a push towards the all-time high of 30,756.

 

So, the Nasdaq 100 forecast and trend remain overall bullish and Nvidia may have given markets something to celebrate today. Jackson Hole could determine whether the party continues.

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R