Week Ahead on Wall Street: Artificial Intelligence

Out With the Old, In With the New

Chances are, you’ve probably heard of artificial intelligence. AI isn’t just sneaking its way into your daily life — from your phone to smart home devices — it has also been a big investing theme of late — quite possibly the biggest.

For the uninitiated, the launch of ChatGPT at the end of 2022 kick-started a global race for businesses to capitalize on the technology’s potential to boost productivity. The theme’s presence has been felt across markets, with companies on the AI bandwagon getting a lot of attention.

In some ways, there are similarities between the AI craze and past innovations that the market embraced in a similar way; blockchain and the internet as a whole come to mind. Excitement for a technology’s potential can manifest in positive price momentum and hype cycles for certain stocks. This may be playing out now, just as it has before.

A big reason for this dynamic is that thematic drivers are often about the future, rather than the here and now. It takes time to see if a theme will live up to the hype, which allows for investor enthusiasm and exuberance to build.

For the time being, it leaves investors with attempts to read the tea leaves. And when it comes to the present, what better way to do that than looking at the AI poster child, NVIDIA?

The company reports its earnings this week, and investors are sure to dig through its results and guidance to get a better idea of how the overall theme is progressing. With most of earnings season behind us and the week set to be a light one for economic data, this single earnings report is increasingly in focus, with implications for both the AI theme and the broader market.

Economic and Earnings Calendar

Monday

•   Markets are closed for Presidents’ Day.

Tuesday

•   January Philadelphia Fed Non-Manufacturing Activity: The Philadelphia Fed’s survey of manufacturing executives in the region on business conditions and their outlook.

•   January Leading Economic Index: As the name suggests, this is an index composed of various economic indicators that have historically led changes in the broader economy.

•   Earnings: Allegion (ALLE), Celanese (CE), CenterPoint Energy (CNP), CoStar Group (CSGP), Caesars Entertainment (CZR), Expeditors International of Washington (EXPD), Diamondback Energy (FANG), Home Depot (HD), International Flavors & Fragrances (IFF), Keysight Technologies (KEYS), Medtronic (MDT), Realty Income (O), Palo Alto Networks (PANW), Public Storage (PSA), and Walmart (WMT).

Wednesday

•   January 30-31 FOMC Meeting Minutes: The Federal Reserve releases detailed notes of every FOMC meeting three weeks after their conclusion. Investors often look for more information on Fed officials’ views for hints on the outlook for interest rates and the economy.

•   Weekly Mortgage Applications: Mortgage activity gives insight on demand conditions in the housing market.

•   Fedspeak: Atlanta Fed President Raphael Bostic will give at the Airports Council International CFO Summit. Fed Governor Michelle Bowman will speak at an Exchequer Club meeting.

•   Earnings: Analog Devices (ADI), ANSYS (ANSS), APA Corp (APA), Etsy (ETSY), Exelon (EXC), Garmin (GRMN), Host Hotels & Resorts (HST), Mosaic (MOS), Marathon Oil (MRO), Nordson (NDSN), NiSource (NI), NVIDIA (NVDA), Synopsys (SNPS), and Verisk Analytics (VRSK).

Thursday

•   January Chicago Fed National Activity Index: This is a monthly index put together by this regional Fed that incorporates 85 indicators from four categories: production and income; employment, unemployment, and hours; personal consumption and housing; and sales, orders, and inventories.

•   January Existing Home Sales: Most home transactions in any given month tend to come from the existing market, and as a result set the tone for the broader housing market.

•   February S&P Global US PMIs: These indexes track how purchasing managers across different industries feel about the business environment.

•   Weekly Jobless Claims: This high frequency labor market data gives insight into filings for unemployment benefits. Jobless claims have continued to show a labor market that remains strong despite having cooled.

•   Fedspeak: Vice Chair Philip Jefferson will participate in a Q&A session at a Peterson Institute for International Economics event. Philadelphia Fed President Patrick Harker will give a speech on the economic outlook. Fed Governor Lisa Cook will give a keynote address at the annual Julis-Rabinowitz Center for Public Policy & Finance conference at Princeton University. Minneapolis Fed President Neel Kashkari will participate in a panel focused on the recent trends and the economic outlook. Fed Governor Christopher Waller will discuss the economic outlook and monetary policy at a University of St. Thomas event.

•   Earnings: Ameren (AEE), Booking Holdings (BKNG), Builders FirstSource (BLDR), Copart (CPRT), Coterra Energy Inc (CTRA), Dominion Energy (D), Edison International (EIX), EOG Resources (EOG), Entergy (ETR), Intuit (INTU), Iron Mountain (IRM), Keurig Dr Pepper (KDP), LKQ (LKQ), Live Nation Entertainment (LYV), Moderna (MRNA), Newmont Mining (NEM), PG&E (PCG), Insulet (PODD), Pool (POOL), Quanta Services (PWR), Pioneer Natural Resources (PXD), Teleflex (TFX), and Vici Properties (VICI).

Friday

•   Earnings: Warner Bros. Discovery, Inc (WBD).

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