Good morning investors,
Nvidia delivered exactly what the market needed, crushing expectations with $57 billion in Q3 revenue and guiding to $65 billion for Q4 while CEO Jensen Huang declared Blackwell demand "off the charts." The September jobs report finally arrives this morning, six weeks late but still crucial for December Fed odds. Walmart raised guidance for the second straight quarter while Palo Alto beat but announced another $3.35 billion acquisition. The AI trade lives on, but execution separates winners from wannabes.
Opening Bell: AI Relief Rally
Dow ($DIA ( ▲ 1.36% )) futures surge 235 points with S&P ($SPY ( ▲ 0.23% )) futures up 1.2% and Nasdaq ($QQQ ( ▼ 0.32% )) futures jumping 1.6% as Nvidia's ($NVDA ( ▼ 1.55% )) beat restores confidence. The chipmaker rises 5% premarket after delivering $1.30 EPS versus $1.25 expected on $57.01 billion revenue versus $54.92 billion forecast. The entire AI ecosystem rallies with AMD up 4% and Broadcom gaining alongside power infrastructure plays like Eaton.
Wednesday's reversal ahead of Nvidia saw the S&P gaining 0.4%, snapping a four day losing streak. The anticipation proved justified as Nvidia's results validated continued hyperscaler spending rather than the bubble burst bears expected. Bitcoin's continued slide toward $90,000 remains the sole risk-off signal in an otherwise relieved market.
Nvidia Has Bubble Commentators Looking For New Rationale
Nvidia didn’t just clear the bar last night, it lifted it. The company delivered another dominant quarter, smashing expectations with 57 billion dollars in Q3 revenue and guiding to roughly 65 billion dollars for Q4, well ahead of already elevated forecasts. EPS came in at $1.30 versus $1.25 expected, data center revenue hit 51.2 billion dollars and net income surged 65 percent year on year. The beat was broad, the guide was stronger and the message from Jensen Huang was unmistakable: Blackwell demand is “off the charts” and visibility into 2026 is already firm.
Heading into the print, sentiment had been fragile. The stock was down about 12 percent from the highs, several high profile funds including SoftBank and Peter Thiel’s macro fund had exited positions, and commentators were questioning whether hyperscaler AI budgets were finally slowing. Nvidia’s numbers put that narrative firmly to rest. Hyperscaler capex remains aggressive, data center buildouts continue at pace and the infrastructure layer of the AI cycle remains intact.
Crucially, this was confirmation, not reinvention. Cloud giants’ investment plans (Microsoft, Amazon, Google and Meta), have all signaled for months that AI infrastructure remains the priority. Megacap tech earnings and the spending figures from last quarter already telegraphed what Nvidia delivered here. The company’s roadmap across Blackwell, Vera Rubin and future GPU generations remains years ahead, and management openly hinted that coming architectures could support hundreds of billions in revenue.
The longer-term risk isn’t demand. It’s competition from in-house silicon efforts at Amazon and Google. But as of now, those programs sit alongside Nvidia rather than replacing it. Hyperscalers want optionality, not exclusivity, and Nvidia remains the indispensable core of global AI workloads.
At roughly 29 times forward earnings after a meaningful pullback, the stock looks attractive. My $200 price target remains intact. The AI cycle continues and Nvidia remains the central beneficiary. This print resets sentiment after a shaky few weeks and positions the market for the year end move I’ve been calling for.
Walmart's Execution Excellence
Walmart beat on all metrics and raised full-year guidance for the second consecutive quarter, a stark contrast to retail caution elsewhere. Net sales growth guidance increased to 4.8-5.1% from 3.75-4.75% while adjusted EPS rose to $2.58-2.63 from $2.52-2.62.
CFO John David Rainey noted consumer behavior showed no major shifts beyond value seeking across all income levels. Ecommerce growth remained double digit while SNAP benefit disruption from the shutdown already reversed. This marks John Furner's first report before taking over as CEO in February when Doug McMillon retires.
Walmart's consistent execution in a selective consumer environment demonstrates why it dominates value retail. Gaining customers, expanding digital, and raising guidance while competitors struggle shows operational excellence transcending economic cycles.
Palo Alto's Acquisition Appetite
Palo Alto Networks beat Q1 with $0.93 adjusted EPS versus $0.89 expected on $2.47 billion revenue, up 16% year-over-year. But the $3.35 billion Chronosphere acquisition announcement overshadowed results, adding to the pending $25 billion CyberArk deal.
CEO Nikesh Arora positions these deals for AI era cybersecurity, noting accelerated compute development forcing infrastructure rethinking. The company remains best in class in an industry benefiting massively from AI buildout, but integration risk and elevated capex at $84 million versus $58 million expected concern investors.
September Jobs: Better Late Than Never
Today's 8:30 AM release of September nonfarm payrolls expects 50,000 jobs added with unemployment at 4.3%. Though six weeks old, this first official data since August provides crucial context for December Fed decisions. October's report won't exist separately, it combines with November on December 16 without unemployment data due to collection impossibility.
Fed Governor Christopher Waller rejected Monday that policymakers are "flying blind," advocating for December cuts despite data gaps. But Wednesday's October minutes revealed deep divisions with "many" officials opposing further 2025 cuts. Markets price just 33% odds of December easing, down from 90% a month ago.
Bond Market Calling the Fed's Bluff
Despite hawkish Fed minutes showing "many participants" suggesting no more 2025 cuts, the bond market signals different priorities. The 10-year yield barely budged at 4.146% while the 2-year holds 3.61% as inflation risk is getting priced out while growth concerns dominate.
The end of quantitative tightening in December represents a clear dovish signal supporting eventual easing. My conviction remains that deteriorating growth overrides internal policy splits, forcing December cuts despite the rhetoric. The bond market's muted reaction to hawkish minutes validates this view.
Final Thought
Nvidia removes the biggest overhang on the market. The fears around AI capex moderation, bubble chatter and hyperscalers “slowing down” were swept away by a single, high quality set of numbers. The companies with the real signal, Microsoft, Amazon, Google, Meta, have already shown us their capex hand. Now Nvidia has confirmed it. In many respects, earnings through 2026 are already mapped out for Nvidia.
The broader market reaction should be straightforward from here. A return to risk-on into year end feels increasingly likely. Tech stabilizes, AI leadership reasserts itself, and the November wobble ends up looking like a classic consolidation phase before a seasonal rally. The next pivotal moment is the December Fed meeting, but even in the face of policy ambiguity, momentum tends to build into late December. Santa Claus rallies don’t require perfect clarity, just the removal of major downside catalysts.
The loudest bubble hosts will now quietly pivot to claim they weren’t referring to Nvidia at all but “other parts” of the AI trade. Rotate the narrative and move on. The underlying reality has not changed: AI remains the strongest secular growth theme in markets and the companies executing at scale continue to justify their premiums.
The market has a path higher from here. Sentiment is reset, positioning is cleaner, and the largest AI bellwether in the world has delivered exactly what it needed to. I expect risk appetite to improve as we move into the final weeks of the year, with quality tech, AI infrastructure and defensive growth leading the way.
As always, feel free to reach out with questions about positioning into year-end.
Best regards,
Dan Sheehan
This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.