Sep 22, 2023

US technology stocks suffered this week as the Federal Reserve maintained its hawkish stance.

nas100 chart

NAS 100: Daily Chart

The NAS 100 index fell to 14,824 following the Federal Reserve’s interest rate decision. The index will now seek support at this level, or around 14,500–600.

Cisco Systems announced on Thursday that it would acquire Splunk, a cybersecurity software provider, in a deal valued at $28 billion. Analysts at Wedbush believe that this deal could trigger a “tidal wave” of activity in the tech security and AI sectors.

The outcome of this situation is still uncertain, as macroeconomic struggles continue to have a negative impact on US stock indices. The Nasdaq will need to maintain its support level or risk a larger price breakdown, which could put an end to the AI-driven tech rally.

Nvidia, the tech darling of the year, is still on a downward spiral, falling 14% this month. CEO Jensen Huang is not helping matters by continuing to sell shares. According to two SEC filings, Huang sold 59,376 shares from September 12 to 13, for a total of $26.9 million. And just a week ago, he sold shares worth $42.8 billion through the exercise of stock options.

I guess Huang is not as confident in Nvidia’s future as he once was.

Some social media users expressed suspicion over Nvidia’s revenue performance in the second quarter, as the company’s sales doubled while its cost of goods sold rose only 7%.

The authors of the article related this to Nvidia’s $100 million investment in CoreWeave this year, which was followed by the company raising $2.3 billion in debt from Magnetar Capital and Blackstone by pledging Nvidia chips as collateral.

A Bernstein analyst stated that there was no issue, and that the interest in CoreWeave was justified. “As companies like CoreWeave build businesses based on NVIDIA GPUs, it is in NVIDIA’s best interest to see them succeed, as their presence offers a counter to the threat of larger cloud service providers developing their own internal AI offerings,” the analyst said.

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