NVIDIA Drives a Broad Market Rally
NVIDIA (NVDA) posted strong numbers, which were expected, and broke its pattern of trading lower in six of the last eight quarters. It rose about 8%. The stock first dropped a couple of percent on the beat. The turn came from guidance: NVDA not only raised guidance but gave guidance stretching through 2028. That guidance drove a 6-7% after-hours rally and the roughly 8% gain the next day.
Heading into the print, technology was underperforming the S&P 500. Software stocks that had been strong over the prior months started showing weakness, dragging tech and semiconductors lower. After the report, the move reversed into a broad-based rally across technology, plus financials that had lagged. Software jumped hard: Salesforce (CRM) up 21%, CrowdStrike (CRWD) up more than 17%. NVDA acts as the tide that lifts all boats for the tech trade, alongside rotation into healthcare and financials.
CME Group - A Toll Booth on Global Volatility
CME Group (CME) was strong early in the year, took a hit over the last six months, then recovered and broke out above key resistance at 270. The breakout came on strong volume with relative strength that beat the S&P 500, a sign of possible institutional buying. Initial upside target is $300; the longer-term objective is the 330-340 highs from earlier this year.
CME benefits as interest rate futures, S&P futures, crude, gold, and volatility futures keep setting record volumes. Net profit margins sit at 63%, rare among companies, yet it trades at only 22 times forward earnings. Retail participation in futures contracts and interest rate derivatives adds to the case. Rate uncertainty helps CME too - whether a hike comes in September, and where global rates head given multi-decade highs both in the US and many countries. CME is the toll booth on global financial volatility, and September often brings a rough ride, making this a good time to look at it.
Marvell and the Shift to Custom Silicon
Marvell (MRVL) broke out above 240. Like all semiconductors, it took a hit over recent months but recovered over the last couple of weeks. Even after NVDA's blowout earnings, custom silicon stands out as an interesting niche in the semiconductor industry.
Hyperscalers and AI labs are focusing more on inference compute rather than training compute. NVDA has essentially cornered the training compute market, and inference compute up to now, but hyperscaler spending over the next few years will start shifting some work away from NVDA toward custom silicon chips. Recent deals back this: Meta (META) with Broadcom (AVGO) and Marvell (MRVL), plus activity at AWS (AMZN) and OpenAI, all targeting custom chips built for inference rather than training in their data centers.
Broadcom (AVGO) and Marvell (MRVL) sit at the front of the custom silicon space. MRVL essentially owns that space and also makes the interconnect that moves the huge data volumes between centers, a piece that matters heavily for the capex hyperscalers have committed to. The breakout above 240 points to an upside objective near 290. MRVL earnings come out at 4:05 Eastern, with very high expectations going in.
