Welcome to The Week Ahead! I hope you all have just enjoyed the last Bank Holiday before Christmas. The US market gets its turn on Monday, when the country shuts down for the Labor Day holiday.
Investors who’ve been riding the AI momentum in US markets should at least be able to relax over the long weekend. The reception given to this week’s results from $4trn chip giant NVIDIA (NSQ:NVDA) suggest the market is not banking on a slowdown in AI spending anytime soon.
Nvidia’s share price fell slightly on Thursday after its results on Wednesday night, but investors seem largely reassured by a solid set of figures that showed revenue up by 56% year on year.
Even so, I think it’s worth noting that the sequential quarterly growth rate reported on Wednesday was the company's lowest since ChatGPT launched in 2022. There’s also still some uncertainty over the company’s ability to capitalise on sales opportunities in China.
A correction in the booming AI market may still be some way in the future. But a new report from MIT this week has suggested 95% of corporate AI programs are not currently achieving any measurable benefits. Unless this changes soon, I suspect that we’ll see the current pace of growth slow at some point.
UK housing market in focus
The week ahead will bring a selection of high-profile US economic data, including key data on employment and manufacturing activity. However, corporate earnings from across the pond seem likely to be of limited interest, with very few big names due to report.
Here in the UK, next week sees us at the beginning of a much busier period for UK company news.
One sector I think could be worth watching next week is housing and construction supplies. While the FTSE 100 has continued to move higher over the last couple of months, the summer lull has seen UK housebuilders’ share prices fall sharply.
The big listed firms have all fallen by 10%-20% since June, thanks to a mix of sluggish trading, cost headwinds and weak sentiment. Some are also suffering a notable cash drag from ongoing building safety remediation programmes:
We’ve covered updates from Persimmon, Barratt Redrow, Berkeley Group, Bellway…
