Guotai Junan US Stock Strategy: Is "AI Trading" Overheated?

According to the Zhitong Finance APP, Guotai Junan released a research report stating that the prospects of the AI industry are not only the core pricing logic for leading companies in the US stock market but also an important barometer for the development of the US economy and the overall profitability of US stocks. Despite the high valuations in the US stock market, the rapid development of the AI industry and the realization of profits can continuously digest the optimistic expectations of high valuations. Looking ahead, a "soft landing" for the US economy is the baseline scenario, and there is still an upward trend in risk appetite, which means an increase in investors' willingness to bear risks. Technology, as the core driving force of the US economy, is expected to continue to attract capital inflows. NVIDIA (NVDA.US) earnings announcement has become a major event of market concern this week following the elections and interest rate cuts. The market seems to have slightly cooled on the enthusiasm for the "Trump trade" and the "Fed rate cut trade," showing signs of weakness in the S&P 500 index's upward momentum. The market's focus and enthusiasm have shifted to another significant event—the third-quarter financial report of NVIDIA. Investors hope to find clues about the future trend of the US stock market from NVIDIA's earnings report. Since the beginning of the year, the S&P 500 index has accumulated a gain of 24.7%, with a valuation level of 26.6 times, reaching 91% of its historical percentile. The high valuation of US stocks is mainly driven by the rapid development of the AI industry, which boosts the high profit growth and optimistic expectations of the US stock market. NVIDIA's performance can reflect the development process of the AI industry to some extent. On a deeper level, NVIDIA's stock price performance reflects the prospects of the US economy. Directly, NVIDIA has the highest weight in the US stock market, guiding the overall index. Seven leading technology companies, including NVIDIA, have driven the market up by 24% this year. On a deeper level, AI technology is widely applied in industries such as production, services, autonomous driving, healthcare, education, and enterprise operations, improving the productivity of various sectors within the economy and promoting economic growth. In the AI chip sector, NVIDIA's chips occupy a vast majority of the market, and the chips it produces have even become the "hard currency" of technological development. To some extent, investing in NVIDIA is investing in the prospects of the US economy and the profit expectations of the entire US stock market. After NVIDIA's earnings report, the stock price was once under pressure, and the market's overly high expectations underwent correction. NVIDIA announced its Q3 financial report after the US stock market closed, with performance exceeding market expectations, but its stock price fell more than 5% in after-hours trading. This is mainly because AI investors are the most optimistic investors in the market, and if the earnings report does not meet the most optimistic expectations, it will trigger a stock price correction. As the US economy shows resilience, the prospects of the AI industry continue to raise investor expectations, and the US stock market continues to rise. Risk factors: US economy unexpectedly weak; escalation of international geopolitical events