This Week in Markets - May 19: NVIDIA Week
It's all eyes on Jensen as the AI king reports earnings amid the greatest bull run in years.
Welcome back to another weekly market prep with The Dividend Journal! If this is your first time here, great timing. This newsletter is your one stop shop to stay ahead of the market and step into the week fully prepared.
Last week was extraordinary. SPY 0.00%↑ hit fresh record highs above 7,500 for the first time ever, and we're now seven weeks into one of the strongest stretches in market history. CSCO 0.00%↑ ripped 16% after announcing $9 billion in AI infrastructure orders, proof that this AI boom has legs beyond the usual suspects.
All roads lead to Wednesday. NVDA 0.00%↑ reports after the close, and with the stock at all time highs and carrying the entire semiconductor complex on its back, this is the most important earnings report of the quarter. The market's in full FOMO mode, can Jensen deliver another blowout to justify these valuations?
Let's get into it.
📊 Last Week Recap
SPY 0.00%↑ closed Friday at a record 7,500, up 2.8% for the week. These are numbers you see in the strongest bull market phases.
Cisco's earnings Wednesday was the catalyst. The networking giant reported $9 billion in AI infrastructure orders, crushing estimates and proving that enterprise AI spending is accelerating faster than anyone expected. The 16% surge dragged every infrastructure play higher.
The semiconductor rally was relentless. SMH 0.00%↑ ained 4.2% for the week, with AMAT 0.00%↑ , LRCX 0.00%↑ , and KLAC 0.00%↑ all hitting new 52-week highs. Even laggards like INTC 0.00%↑ caught a bid. The AI infrastructure story is resonating across the entire supply chain.
Outside tech, the story was mixed. TGT 0.00%↑ fell 3% on weak guidance and WMT 0.00%↑ struggled despite solid results. The divergence between AI beneficiaries and traditional sectors couldn't be starker.
As I covered a couple weeks back, narrow leadership can sustain longer than most expect, but it makes individual stock selection critical. You want to own names actually benefiting from the mega trends, not hoping for broad market beta.
📅 This Week's Economic Calendar
Tuesday: Retail Sales (April) and Housing Starts
Wednesday: FOMC Meeting Minutes from the May 7th meeting
Thursday: Initial Jobless Claims and Existing Home Sales
Friday: Flash PMI Manufacturing and Services
The FOMC minutes Wednesday are the main macro event. Markets will parse every word for clues on the Fed's next move, especially with inflation data running sticky. Tuesday's retail sales print could also move tape given the mixed WMT 0.00%↑ and TGT 0.00%↑ eads.
🔥 The Main Event: NVIDIA Earnings
All eyes on NVDA 0.00%↑ Wednesday after the close. Consensus is $1.77 EPS, a staggering 118.5% YoY jump. Revenue estimates are around $24.5 billion, up from $11.2 billion in the same quarter last year.
The bar is high. NVDA 0.00%↑ has beaten for seven straight quarters and gapped higher every time. But we're at a point where the company needs to demolish numbers, not just beat, to keep this rally going. The stock is up over 190% YTD and trading at nose-bleed valuations even by growth stock standards.
Here's what I'm watching for:
Bull case: Data center revenue tops $22 billion (vs $20B expected), gaming shows sequential growth, and Jensen raises full-year guidance again. Sympathy plays: AMD 0.00%↑ , MRVL 0.00%↑ , AVGO 0.00%↑ , and infrastructure names like $CSCO that already showed strength.
Neutral case: Solid beat, no major guidance raise. Stock trades sideways to slightly higher. Probably the most likely outcome given how high expectations are already.
Bear case: Any sign of AI capex slowdown, gaming weakness, or China headwinds. Even a small miss could trigger profit-taking across the entire semi complex. Watch SMCI 0.00%↑ , ARM 0.00%↑ , and the more speculative AI plays for weakness first.
The ripple effects will be massive either way. NVDA 0.00%↑ is the ultimate market barometer right now, and Wednesday evening's move will set the tone for the rest of May.
📈 Market Update
SPY 0.00%↑: We saw a pretty lofty pullback on Friday OPEX, but a lot of selling brought major leaders + the indices to the daily 9EMAs. For uptrend believers, we need this spot to be defended and ideally an aggressive rebound in the coming days. Otherwise, we will visit the 21EMA pretty quickly and go from there.
In terms of a true uptrend, the 9EMA has to be the true defense.
Bitcoin: Price has begun to be frothy with price not really respecting EMAs now. Expect more choppiness and as the true tell to be cautious in the rest of the market.
🎯 Game Plan
Early week: use any Monday or Tuesday weakness to add to high conviction positions ahead of $NVDA. The momentum is too strong to fight.
Post-NVDA: in the bull scenario, the rally extends into month end on more FOMO buying. In the bear scenario, be ready for a swift 5-10% correction, likely a buying opportunity for quality names.
The key is position sizing. Don't be a hero with full positions going into the most important earnings report of the quarter, but don't fight this trend either.
🔍 What I’m Watching
ASTS 0.00%↑: Strong weekly close on a high volume bar post-ER. With SpaceX IPO right around the corner, aerospace names could be in for a nice run up excitement and sell the news.
NVTS 0.00%↑: Great continuation contender with NVDA 0.00%↑ ER this week. Green in a red tape Friday shows great RS.
DDOG 0.00%↑: Massive stage 2 weekly base break out in the works. This beaten down software name after earnings looks like it wants to be an outlier. Look for longer dated bullish exposure.
UNP 0.00%↑: Huge consolidation on this transportation name, with RS and weekly hammer curling to the highs. Although a slow mover, this name looks like a huge ripper in the making.
💡 My Take
I'll be the first to admit this market feels frothy. QQQ 0.00%↑ up 8% in one month while most sectors struggle is textbook late stage momentum. Concentration in AI names is extreme, and valuations are stretched.
But here's what I learned from missing earlier AI rallies: these mega trends run longer and higher than anyone expects. $NVDA has proven quarter after quarter that demand for AI infrastructure is real and growing exponentially. As long as CSCO 0.00%↑ is booking $9 billion in AI orders, this story has more chapters to write.
The smart play is to ride this momentum while managing risk carefully. Keep position sizes reasonable, trail stops under key EMAs, and be ready for volatility. Just don't try to time the top of a trend that's still accelerating.
This isn't the week to be conservative. If $NVDA delivers another blockbuster, we could see a melt-up that makes the current gains look modest.
See you next week. Trade well.
Will