<div id="readability-page-1"><div><div>A sudden tumble in the high-flying factor names could be paving the way for a reversal, say Goldman Sachs traders, putting the spotlight on ETFs tied to the factor ahead of NVIDIA Corp.’s NVDA closely followed earnings next week.Nvidia's quarterly results could decide the fate of momentum stocks and the ETFs that track them, after a two-week slide put the high-flying trade under pressure.Nvidia is down more than 4% in the past week. Track its prices live, here.Goldman’s High Beta Momentum basket, which bundles together the latest winners in the market and shorts losers, fell 13% from Aug 6 to Aug 19, its fourth drop of over 10% this year, as reported by Bloomberg. Historically, these sharp declines have tended to reverse rapidly from such a point. Goldman Sachs pointed out that in previous instances when the basket declined 10% or more in five days, it recovered during the next week, 80% of the time, with median returns of 4.5% during the next week and over 11% over the subsequent month.<h2>The ETF Angle</h2>Momentum-based ETFs such as the iShares MSCI USA Momentum Factor ETF MTUM and Invesco Dorsey Wright Momentum ETF PDP offer investors direct exposure to the same high-octane growth stocks that dominate Goldman’s basket, the likes of Nvidia, Advanced Micro Devices Inc AMD, and Palantir Technologies Inc PLTR. That makes the funds especially sensitive to whether Nvidia’s earnings next week can revive enthusiasm in AI-related equities or deepen the selloff.ETFs that follow the momentum factor have also experienced uneven returns in 2025, with several abrupt swings related to the AI trade. The latest rout also questions whether these vehicles can be used as tactical trades or not long-term positions.<h2>What’s Driving The Sell-off</h2>Losses in AI leaders such as Palantir, AMD, Super Micro Computer Inc SMCI, and even Nvidia, pulled the basket down. These formerly crowded trades now face profit-taking, high valuations, and nervousness about China’s competitive squeeze.<h2>The Risk To Rebounds</h2>Although Goldman’s traders point out that momentum has previously rebounded following steep drops, some warn that the factor has been erratic throughout the year. Bloomberg Intelligence’s Christopher Cain said that high-momentum stocks have some of the most costly valuations relative to low momentum in history.The last catalyst will depend on Nvidia’s earnings next week. As the heaviest weight in the S&amp;P 500 and Nasdaq 100, the chipmaker’s report could make or break whether momentum ETFs produce another record rebound — or this is merely the beginning of a more significant correction.<ul> <li>TJX Is Winning – But Your Retail ETF Might Be Missing The Move</li> </ul>Photo: Chung-Hao-Lee via Shutterstock</div></div></div>

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Nvidia's upcoming earnings report is pivotal for momentum ETFs, as a recent decline in high-flying stocks has raised concerns. Goldman Sachs noted that their High Beta Momentum basket fell 13% recently, but historically, such drops often lead to recoveries. ETFs like iShares MSCI USA Momentum Factor ETF and Invesco Dorsey Wright Momentum ETF are particularly sensitive to Nvidia's performance. The sell-off is driven by profit-taking and high valuations in AI stocks. Analysts warn that while rebounds are possible, momentum stocks are currently facing significant valuation challenges.

- Goldman Sachs traders suggest that a recent decline in high-flying factor stocks may signal a potential reversal, particularly with NVIDIA's upcoming earnings report.  
- The High Beta Momentum basket fell 13% recently, but historically, such declines have often led to rapid recoveries, with an 80% chance of bouncing back within a week.  
- The performance of momentum-based ETFs, sensitive to NVIDIA's results, remains uncertain as they face challenges from profit-taking and high valuations amid a volatile AI market.

Nvidia's Earnings Could Make Or Break Momentum ETFs