AI still under pressure — but some analysts see a year-end rally

The Nasdaq Composite fell by 0.84% on Monday, reflecting a downturn in technology stocks, with major players like Apple, Meta, and Oracle each dropping more than 1%. Nvidia, a crucial player in the artificial intelligence sector, faced even steeper losses, declining nearly 2%. CEO Jensen Huang previously stated that the chipmaker has secured approximately $500 billion in business for 2025 and 2026, raising expectations ahead of the company’s third-quarter earnings report scheduled for Wednesday. Investors are keenly awaiting Huang's insights for hints of robust growth in 2026, as the company's performance is pivotal in the AI landscape alongside OpenAI. However, analysts warn that any underwhelming guidance could lead to a significant market reaction. Baird investment strategist Ross Mayfield noted that any signs of weaker demand forecasts could negatively impact investor sentiment. Despite ongoing concerns about high valuations and capital expenditures leading to a sell-off in tech, some analysts are still optimistic about a year-end market rally. Michael Graham from Canaccord Genuity expressed cautious optimism, suggesting that a mix of bullish and bearish signals points toward a potential rally as the year concludes. Similarly, Max Kettner, HSBC's chief multi-asset strategist, conveyed a greater likelihood of a market surge compared to fears of an AI bubble bursting. As major U.S. indexes struggled on Monday, technology stocks continued their downward trend, although Alphabet managed to stand out positively following news of Berkshire Hathaway acquiring a stake in the company. In Europe, the pan-European Stoxx 600 index dipped by 0.54%. In other news, Fed officials expressed divided views on a potential rate cut in December, highlighting a focus on the labor market's recent weaknesses. Additionally, India announced a significant energy deal with the U.S., committing to import nearly 10% of its liquefied petroleum gas from American sources, a move aimed at strengthening diplomatic ties. The price of Bitcoin, which has seen a downward trend, is being watched closely as analysts suggest it may indicate future challenges for U.S. stocks, though others believe it still has potential support in the near term. Meanwhile, Switzerland's new trade agreement with the U.S. has sparked debate, with critics labeling it a capitulation to American interests, raising concerns about its impact on Swiss consumers and farmers.