Nvidia's latest earnings report arrives at a delicate time. The firm has become the unofficial scoreboard for the entire AI boom, supplying the chips that power everything from model training to the latest rounds of corporate optimism. When its numbers land, they will reveal whether the industry's extraordinary momentum is still rooted in real demand, or whether investors have spent the year cheering a circular money loop in which companies buy GPUs mostly so they can say they are buying GPUs.

Options traders expect a dramatic move in either direction, a sign of both nervousness and the outsized role Nvidia now plays in market psychology. Such volatility would once have been unthinkable for a semiconductor manufacturer. Yet Nvidia is no longer treated as one. It has been cast as the high priest of the AI age, its results read like scripture by believers and sceptics alike.

The broader market has begun to look queasy. After months of relentless gains, the S&P 500 has slipped from its highs. Investors are rediscovering inconveniences once deemed old-fashioned: earnings, valuations, and the awkward fact that interest rates do, occasionally, matter.

Retailers offer a contrasting picture of the real economy beneath the AI froth. Target reports shoppers are growing cautious in the face of high prices. 

For markets, the central question is whether AI is entering a solid, cash-generating phase, or whether expectations have sprinted too far ahead of reality. The uneasy truth is that both may be correct. The technology is undeniably transformational, but the business models remain fuzzy. Many companies insist their AI investments will pay off soon, fewer can explain how.

The risk is not that AI fizzles, but that investors tire of waiting. Financial history is littered with technologies that changed the world eventually but vexed shareholders along the way. The internet did not disappoint humanity, but it severely tested the patience of those who bought dot-com stocks in 1999.

This leaves Nvidia in an awkward position. It must reassure investors not just about its own fortunes but about the health of the entire AI ecosystem. If demand looks durable and profit margins continue to hold, the company may once again steady the market. Should anything less than perfection appear, even briefly, the reckoning may be swift.

Today will also see the release of the minutes from the latest Fed meeting, this afternoon. They are set to reveal not just a policy debate but a family argument conducted with unusually public candour. With official data delayed by the government shutdown, policymakers have been forced to operate in a statistical fog, relying on alternative indicators that do little to settle nerves. The result has been a rare split: some officials worry the economy needs further easing, while others fear the Fed has already gone far enough. Add to this the approaching end of Jerome Powell’s tenure and the institution’s traditional preference for consensus begins to look more aspirational than operational. Investors now assign roughly even odds to another rate cut in December..

Things are no better in Europe, where most indices are nursing a four-day losing streak. Within the broad Stoxx Europe 600, nine of ten sectors have slipped into the red since mid-last week. Only utilities have managed to stay afloat, particularly energy producers. A timely reminder that in finance, the most defensive sectors are those that remain after the superfluous is stripped away. One can live without a Hermès bag, a BMW, or the latest iPhone - but not without food, drink, healthcare, heating, or, indeed, toilets. Which brings us neatly back, although one still wonders who gets to decide what warrants a global awareness day.

Elsewhere on the macro front, Saudi leaders are being hosted with great fanfare in Washington. Rich, business-friendly, and largely unmoved by Western sentimentality, Saudi Arabia is seen by President Donald Trump as a far more straightforward partner than, say, Europe. Numerous high-profile deals have been inked between the two nations, notably in defence and AI. Elon Musk and Nvidia CEO Jensen Huang were among the guests at a state banquet.

Meanwhile in the US, Congress has approved the forced release of Department of Justice files related to the Jeffrey Epstein case. On the diplomatic stage, Sino-Japanese trade tensions continue to escalate, with retaliatory measures now visibly in motion.

Across Asia-Pacific markets, the mood remains subdued in the wake of recent declines. European futures remain tentative, while Wall Street futures are modestly in the red. Volatility remains elevated, with the VIX rising to 24 - its highest in a month - a reminder that markets could shift direction quickly.

Today's economic highlights:

On the agenda today: in the United Kingdom, the CPI GM and the HICP GA; in the eurozone, the CPI GM and the CPI GA; in the United States, building permits, housing starts, DOE crude oil inventories, and consumer confidence; finally, the adjusted trade balance in Japan. See the full calendar here.

  • Dollar index: 99,720
  • Gold: $4,120
  • Crude Oil (BRENT): $63.37 (WTI) $59.17
  • United States 10 years: 4.08%
  • BITCOIN: $91,719

In corporate news:

  • Nvidia and Menlo Micro collaborated to develop new chip-testing technology that speeds up AI GPU validation by 30% to 90%, easing a key production bottleneck.
  • Target posted a fifth straight quarterly sales decline and cut its annual earnings forecast while announcing an additional $1 billion investment in store upgrades for 2026.
  • Teva launched "Teva Rise," an open innovation platform to partner with startups globally in tackling R&D and digital transformation challenges in the pharmaceutical sector.
  • TJX raised its full-year profit forecast after reporting strong Q3 results driven by 5% comparable sales growth and cost efficiency.
  • Spain opened an investigation into Meta over alleged privacy breaches related to hidden tracking of Android users, citing potential violations of EU data laws.
  • The EU proposed delaying enforcement of its 'high risk' AI rules to 2027 amid pushback from Big Tech and to streamline tech regulations.
  • Merck announced its oral HIV regimen met both efficacy and safety goals in a Phase 3 trial, potentially matching Gilead's market-leading treatment.
  • Larry Summers resigned from the OpenAI board after revelations of past correspondence with Jeffrey Epstein, citing the need to rebuild trust.
  • Adobe is nearing a $1.9 billion acquisition of software provider SEMrush, paying $12 per share, according to WSJ.
  • Joby Aviation signed an MoU to begin pre-commercial eVTOL flights in Saudi Arabia by H1 2026 in partnership with Red Sea Global and The Helicopter Company.
  • Singapore's central bank appointed six managers including BlackRock to manage a S$2.85 billion fund aimed at boosting local stock market liquidity.
  • Nasdaq and Singapore's SGX will launch a joint global listing board by mid-2026 to simplify dual listings.
  • Flydubai signed an MoU to purchase 75 Boeing 737 MAX planes with options for 75 more, marking its fourth such order.
  • Hbm Holdings' unit Nona Biosciences licensed its HCAB platform to Pfizer, securing upfront and milestone payments in the deal.
  • Penske Automotive acquired four dealerships in California and Texas, expected to add $1.5 billion in annualized revenue.
  • EU's General Court rejected Amazon's bid to remove its "very large online platform" label, confirming stricter content moderation requirements apply.
  • Nvidia's switch to LPDDR memory for AI servers could double server-memory prices by 2026 due to unprepared global supply chains, according to Counterpoint Research.
  • Ocado shares plunged after Kroger announced it would close three automated warehouses, significantly impacting Ocado's U.S. expansion strategy and fee revenue.
  • Genmab has received FDA approval for its combination therapy for follicular lymphoma and announced a $2.5 billion senior notes offering.
  • Siriuspoint Ltd has named Maria Tarhanidis as its new Chief Investment Officer.
  • Meta has experienced a significant leadership change with the departure of Chief Revenue Officer John Hegeman.
  • Google DeepMind has launched a new AI research lab in Singapore to collaborate across Asia-Pacific.
  • Paramount is in talks with the Saudi Wealth Fund about acquiring Warner Bros Discovery.

Analyst Recommendations:

  • Axalta Coating Systems Ltd.: RBC Capital downgrades to sector perform from outperform and reduces the target price from USD 35 to USD 30.
  • Doordash, Inc.: Jefferies upgrades to buy from hold and raises the target price from USD 220 to USD 260.
  • Freeport-Mcmoran Inc.: Scotiabank upgrades to sector outperform from sector perform and reduces the target price from USD 51 to USD 47.
  • Medtronic Plc: Goldman Sachs upgrades to neutral from sell and raises the target price from USD 81 to USD 111.
  • Molson Coors Brewing: Wells Fargo downgrades to market weight from overweight and reduces the target price from USD 53 to USD 50.
  • The Home Depot, Inc.: KGI Securities Co Ltd downgrades to neutral from overweight and reduces the target price from USD 423 to USD 320.
  • Wesco International, Inc.: RBC Capital upgrades to outperform from sector perform and raises the target price from USD 262 to USD 302.
  • Zions Bancorporation, National Association: Jefferies upgrades to buy from hold and raises the target price from USD 55 to USD 60.
  • Illumina, Inc.: Daiwa Securities maintains its neutral recommendation and raises the target price from USD 94 to USD 124.
  • Micron Technology, Inc.: TD Cowen maintains its buy recommendation and raises the target price from USD 200 to USD 275.
  • Quanta Services, Inc.: Haitong International Research Ltd maintains its outperform rating and raises the target price from USD 383 to USD 483.18.
  • Vaxcyte, Inc.: Leerink Partners maintains its outperform recommendation and raises the target price from USD 60 to USD 77.