AI stocks are fluctuating wildly! Is the biggest turning point coming? While Nvidia plunged, there are stocks that are moving in the opposite direction.

When examining the reasons for the sharp rise and fall, it suggests that August 2 could be the biggest turning point. This time, let's organize the background factors and points to watch. In addition, let's check the stocks with good earnings that have moved in the opposite direction in the volatile market.

Causes of the sharp rise and fall in AI stocks.
Factors contributing to the July 31st rise:
1) Federal Reserve Chair Powell suggesting a rate cut in September
⇒ High-tech stocks are being bought with expectations of a rate cut
2) AMD announced strong earnings and raised its revenue forecast for AI semiconductors　
⇒ The benefits of the AI investment boom extend to AMD as well, and semiconductor stocks like Nvidia are rebounding
3) Microsoft announced further increase in investment for AI
⇒ Microsoft's expansion of investment in AI, leading the way in AI investment, indicates the continuation of the AI investment boom

● Reasons for the decline on August 1st
1) Mixed earnings
For example, Microsoft indicated an expansion of investment in AI, but the growth rate of its cloud business did not meet market expectations. The revenue from Azure in the 4-6 period increased by 29%, a slight slowdown from the 31% increase in the previous period. The contribution from AI increased to about 8 points from the previous 7 points, but the stock price declined. This suggests that investors are sensitively responding even to slight underperformance.

2) Recession concerns
Ahead of the announcement of the employment statistics on the 2nd, indicators signaling uncertainty about the future of the economy have emerged. First, the ISM manufacturing index for July was 46.8, a deterioration from 48.5 in June. It fell below market expectations and crossed below the 50 mark, which separates expansion from contraction, for the fourth consecutive month. Next, the July ADP employment report, a leading indicator for employment statistics, showed an increase of 0.122 million people, the lowest since January. The number of initial jobless claims was at the highest level in almost a year. Signs of a deteriorating labor market have emerged, intensifying concerns about recession.

The biggest challenge? Subsequent points of attention
With several economic indicators signaling an economic slowdown, the previous day's FOMC meeting chose not to implement a rate cut in July. If the employment statistics on August 2nd also indicate a recession signal, there might be a risk of the Federal Reserve being slow to respond. In other words, a 'policy mistake' may be looming. The intense sell-off of high-tech stocks amid concerns about recession and the risks of a Federal Reserve policy mistake...Recession concerns + worries about a Federal Reserve policy mistakeIt is considered to have been in the background.

Regarding the AI stocks led by NVIDIA, "Concerns about the lack of profit growth due to the massive investment in AI are also a selling point.This concern has also been raised during the previous earnings season. Why is it more cautious this time? It is considered to be due to the "recession concerns + policy mistake concerns" lingering.

Therefore, in the short term, employment statistics may be more important than anything else, and tonight (August 2) may be the biggest turning point. If a recession signal is sent even from employment statistics, the FRB's decision to refrain from an interest rate cut in July may be judged as a policy mistake, leading to even greater caution.

Next, in confirming the profit growth due to the AI boom, NVIDIA's earnings scheduled for August 28 will be even more important. Big tech's earnings have been mixed, but the outlook for AI investments is expanding, which could be a positive factor for NVIDIA. On the other hand, considering that some big tech companies experienced a sharp drop in stock prices due to slight underperformance, investors' "tolerances" have decreased. There is also a possibility that performance pressure on NVIDIA is increasing. As of August 2nd, the average target stock price by the analysts is $140.50.Average target stock price by analysts is $140.50 as of August 2ndis turning out to be.

When we check for stocks that have performed better than expected, Defensive stocks such as public welfare and pharmaceuticals stood out.If the weak market continues due to increasing concerns about recession, these high-performance defensive stocks may continue to receive attention in the future.