The AI Trade Is Under Pressure to Start the Week. Nvidia’s Results Will Test the Sector

Nvidia's forthcoming earnings report is expected to put investor confidence in the AI sector to the test this week. Worries surrounding the viability of AI investments have recently impacted Nvidia and other AI-related stocks. The AI sector has faced some obstacles recently, with the trade relying heavily on Nvidia's earnings later in the week.

Nvidia, considered a barometer for the AI trade, will provide investors with an update on its finances after the close of markets on Wednesday. Analysts have cautioned that anything short of strong results could exacerbate the sector's recent struggles. Nvidia's shares, trading at 2% lower in early Monday trading, have risen about 13% in 2023, although they are over 10% below their May highs due to concerns about an AI bubble and the sustainability of spending on the U.S. AI buildout.

Other companies tied to the AI boom, such as hard drive maker Sandisk (SNDK), the S&P 500's biggest annual gainer, have also experienced recent declines.