After one of the year's worst days for chip stocks, Friday brought a rebound. Nvidia rose, AMD jumped about 11%, and the chip index recovered some of Thursday's losses. But do not be fooled: the week as a whole ended lower. For Nvidia it was a fifth straight losing week, leaving the stock about 22% below its October record. The chip index lost about 12% for the week.
The quality of the rebound also raises questions. Gains were concentrated in tech and chip stocks, while most S&P 500 stocks fell on Friday. In investor terms that is a 'narrow' rebound: buying stocks that fell hard rather than a shift in overall mood. Analysts cautioned that the jump does not necessarily mean the tech correction is over.
What is scaring the market? Three things. The first, discussed earlier this week: fear that after the midterms it will be harder to build data centers in the US and chip demand will slow. The second: questions about the return on the enormous AI investments. The giants are spending hundreds of billions, and investors want to see when it turns into profit. The third, specific to Nvidia: according to reports, three House committee chairs asked CEO Jensen Huang to attend a closed-door briefing, adding political uncertainty.
The next event that will set the direction is Nvidia's results, expected on November 17. What to look for? Not just quarterly revenue, which is expected to be strong, but above all the outlook. If Nvidia points to steady or rising demand from the giants, that may calm the market. If it hints at slowing orders, the declines could deepen.
Why does it matter to Israel? Because Nvidia is one of the largest employers in Israeli tech, with a huge development center built partly on its acquisition of Mellanox, and because sentiment around it directly affects Israeli chip stocks. Nova, Camtek and Tower posted record results this week, but their shares are exposed to the same sentiment. The November 17 results will be a test for them too.
