Market Setup
Bulls are pushing higher after CoreWeave's (CRWV) report yesterday gave fuel to the AI trade, at least for the morning. The whole session is about holding that price momentum. No economic data is due and the bond market is closed, so this is a pure trading day.
On the charts, the six-month daily chart showed a morning star candlestick pattern that is now getting follow-through to the upside. The next resistance is the 20-day moving average, sitting near 7658 on the futures chart. The MACD is starting to hinge, with a possible cross if the positive momentum holds over the next couple of days.
Industrials as an AI Signal
Watch the industrial sector as a second or third derivative of the AI trade. Caterpillar (CAT) and GE Vernova (GEV) were hit hard during the rush out of AI names, and many now trade at relatively cheap multiples. A strong, sustained price advance there would signal bulls are buying these bottoms, meaning this is not a dead cat bounce. GE Vernova (GEV) is up about 5.4%. The risk is a repeat of Thursday, when stocks opened strong and then failed to the downside. The XLI (industrials ETF) on the weekly chart looks like it is trying to find a bottom or consolidate and move higher. Sentiment appears to be improving, and a big part of that rests on the CoreWeave (CRWV) results.
CoreWeave (CRWV) Earnings
Shares are up about 15%. The company beat on both top and bottom line:
- Revenue: $3.66 billion, up 170% year over year.
- Adjusted EBITDA: $2.26 billion, around a 62% margin.
- Loss per share showed some differential, but overall numbers were good.
Guidance was raised. Full-year fiscal revenue guidance went to $13 to $13.3 billion, up from the prior $12.4 to $13.2 billion. Operating income guidance was also raised. Capex guidance was increased too, but the company said that is because it delivered capacity to customers sooner than expected. About 70% of its deals are either prepaid, paid in cash, or paid in full, showing it can turn its business into money. That takes some pressure off the AI trade for now.
The debt coverage ratio against revenue is still relatively high and remains a potential risk. The guidance shows no slowdown; the company is doubling down and expects strong results in 2027 and 2028. It believes it will reach positive adjusted net income by the first half of 2028. The stock was oversold, with about 20% of the float shorted, so several dynamics are feeding the move. It still has to hold during the regular equity session.
Nvidia (NVDA) and the Baird Cut
Nvidia (NVDA) shares were recovering and are moving up, but need to hold the 175 level. Several analysts are downgrading. Baird cut the stock to neutral from outperform and slashed its price target to $200, down from $500. Baird is delaying its 2027 data center forecast for now because of reduced visibility and uncertainty on both supply and demand.
Baird also flagged political headwinds and possible issues with the leadership team that the company must work through. H300 lead times are still stretched and demand currently exceeds supply, but the timing adds risk if Nvidia (NVDA) cannot deliver those H300s on time. This was the biggest cut seen this morning, with other cuts also out. The $200 target is a sharp drop. Previously there was only one sell rating on Nvidia (NVDA), and even that analyst was less negative on leadership, not expecting Jensen Huang to be pushed out.
S&P 500 Levels
On the S&P 500 (SPX), upside flows point to 7640, downside to 7520. The VIX is around 18.5, implying about a 1.15% move either way. Options flow is more positive this morning. On any pullback, watch the volume-weighted average price for the E-Mini S&P 500, sitting right at 7500. The session started well, but needs follow-through today to push the bears out of the market.
