The upcoming Nvidia (NASDAQ:NVDA) earnings call on Wednesday night marks a pivotal moment, as it has been a year since the chipmaker first astonished Wall Street with its robust demand for AI chips. Since then, discussions around AI have surged on earnings calls, soaring by 186% since the first quarter of 2023, according to Bank of America Research.
What’s noteworthy is the evolving narrative around AI, shifting from chipmakers like Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD) to major AI adopters such as Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Meta (NASDAQ:META), Amazon (NASDAQ:AMZN), and Microsoft (NASDAQ:MSFT). Moreover, strategists are now highlighting the broader impact across various sectors, including Energy (XLE), Utilities (XLU), and Commodities, as they stand to benefit from increased AI usage.
“It’s not just about NVDA anymore,” stated Bank of America US and Canada equity strategist Ohsung Kwon, underscoring the widening scope of AI’s influence.
This shift is already manifesting in the market, with several sectors experiencing significant growth. Notably, precious metals like copper (HG=F) have reached recent highs, while the Utilities and Energy sectors have emerged as top performers in the S&P 500 (^GSPC) this year.
Individual companies are also reaping the rewards, with some experiencing stock surges comparable to Nvidia’s meteoric rise. For instance, Vistra Corp (VST) has seen a roughly 140% increase in its share value this year, while Constellation Energy (CEG) shares have risen by nearly 90%.
Morgan Stanley chief investment officer Mike Wilson highlighted Utilities as an Overweight sector, emphasizing its alignment with the AI power theme. Wilson noted the potential for electricity consumption to increase significantly by 2030, largely driven by the expansion of AI data centers.
The growing role of AI is evident across various industries, with Goldman Sachs’ equity strategy team reporting a surge in AI mentions during earnings calls, particularly in the Energy sector.
Given the broader implications, investors are keenly anticipating Nvidia’s report for insights into AI chip demand. Nvidia has consistently surpassed expectations, buoyed by strong demand for its AI servers. The trajectory of this trend could have ripple effects across multiple sectors, potentially impacting market valuations.
JPMorgan Asset Management global market strategist Jack Manley highlighted the potential for market volatility if investors reassess their expectations regarding AI’s impact.
Nvidia’s report may serve as a barometer for the broader market sentiment surrounding AI adoption and its implications across diverse industries.
Featured Image: Megapixl
