Morning in New York: The Nvidia Scandal Threatens the AI Rally

A daily review and forecast of events in the U.S. stock market by Mikhail Denislamov, Deputy Director of Capital Markets Research at Freedom Broker.

Stocks in the U.S. technology sector came under pressure following reports of the possible resignation of Nvidia’s (NVDA) CEO. The situation has intensified the debate over the company’s lack of a clear succession plan for its leadership. In after-hours trading, shares of its closest competitors— AMD (AMD) and Broadcom (AVGO)—rose on expectations of a shift in market share. At the top of the list of underperformers were CoreWeave (CRWV), Nebius (NBIS), and IREN (IREN)—cloud providers backed by Nvidia.

At 8:30 a.m. Eastern Time (ET), weekly initial jobless claims data will be released (previous reading: 189,000). At 10:00 a.m. ET, data on existing home sales for October will be released (consensus: –3% to –3.5% MoM; September: +1.5%).

A number of Fed officials will deliver remarks. The investment community will assess their statements in light of the October consumer price index (CPI) data, which came in higher than expected, and the future course of monetary policy. Yesterday, Ostan Goolsbee, president of the Federal Reserve Bank of Chicago, called the pace of CPI growth “almost alarming.”

Following the latest release of the Consumer Price Index, yields on 10-year Treasuries briefly rose above 5%. Futures are pricing in a high probability of a rate hike at the December FOMC meeting. Key tests will be the $25 billion 30-year bond auction, as well as the Producer Price Index (PPI) data for October, which will be released this Friday (consensus: +0.4% MoM, September: +1.3%).

There is still no progress in the negotiations between the U.S. and Iran, although oil prices have resumed their downward trend following a recent period of consolidation. Saudi Arabia increased its production by 26% in October.

Before the start of regular trading, Nebius Group (NBIS), Brookfield Corporation (BN), Figure Technology Solutions (FIGR), and Allot (ALLT) will report their earnings. After the market closes, Applied Materials (AMAT), Cisco (CSCO), Cerebras Systems (CBRS), Nu Holdings (NU), and HeartFlow (HTFL) will report their results. Nebius’s (NBIS) report will provide insight into the pace of AI computing capacity deployment, facility launch timelines, and contract fulfillment. When evaluating the contract portfolio, it is important to consider cash flow timelines and the costs associated with fulfilling orders. Confirmation of the launch schedule and revenue forecast would support NBIS shares. Conversely, an increase in capital expenditures without a comparable improvement in revenue prospects could intensify the sell-off.

S&P 500 futures are trading in negative territory, with Nasdaq 100 futures showing a more pronounced decline. We assess the risk-reward balance as negative amid heightened volatility. Buyers continue to be supported by CoreWeave’s strong earnings report, interest in Anthropic’s IPO, and a recovery in the semiconductor sector. Among the headwinds are uncertainty surrounding the aforementioned shake-up in Nvidia’s top management (news about the company will attract heightened attention from market participants), as well as expectations of tighter monetary policy and rising interest rates.

— Corteva (CTVA) shares are down more than 8% following the first earnings report since the spin-off of its seed business into Vylor. The company’s third-quarter revenue fell 9% year-over-year to $1.59 billion, with sales in Latin America declining by 31%. The company updated its 2026 EPS forecast to $0.76–0.8 and pointed to significantly weaker-than-expected performance in Brazil due to a lack of liquidity among farmers.

— Tetra Tech (TTEK) shares are up more than 8%, having recovered from a 7.5% decline during the main trading session. The company’s adjusted EPS for the fourth fiscal quarter rose 9% year-over-year to $0.49, beating the consensus estimate. The order backlog increased by 13% to $4.67 billion. The EPS forecast for fiscal year 2027 projects an increase from $1.6 in 2026 to $1.65–1.8.

— AEVEX (AVEX) shares soared nearly 15% after the company raised its 2026 revenue forecast from $700–720 million to $820–840 million. The unmanned systems manufacturer’s revenue in the third quarter rose 56.5% year-over-year to $189.7 million, driven by the acquisition of BlackSea Technologies.

— Digi International (DGII) shares plummeted by about 15%, even though its revenue for the fourth fiscal quarter rose 25% year-over-year to a record $143.3 million, and annual recurring revenue (ARR) rose 30% to $197 million. The forecast for revenue in the current quarter puts it in the $140–144 million range. In our view, this implies no growth compared to the previous three months, which disappointed investors.

Trading on November 11 on U.S. stock markets closed higher, just below the day’s highs. The S&P 500 gained 1.31%, the Nasdaq-100 rose 2.28%, the Dow Jones rose 0.49%, and the Russell 2000 rose 0.88%. The bond market, which had seen a sharp spike in yields during trading on November 10, was closed in observance of Veterans Day. The dollar index rose 0.7%, gold fell 0.7%, and Bitcoin rose 1.3%.

The rally was once again narrow: the equally weighted S&P 500 (RSP) lagged behind the main index by about 50 basis points, with just five stocks accounting for 66 basis points of the benchmark’s total gain (131 basis points). The SOX semiconductor index rose 5.7%. The IT sector (XLK: +3.23%); also among the top performers were energy (XLE: +1.86%) and industrials (XLI: +1.33%), where engineering and defense companies stood out. Healthcare (XLV: +0.04%) due to a decline in managed care, real estate (XLRE: +0.02%), and the consumer discretionary sector (XLY: -0.05%), which was negatively impacted by retailers and developers.

Nvidia (NVDA: +2.87%) contributed 18 basis points to the S&P 500’s performance thanks to a rebound following two sessions of selling amid an investigation into its CEO. Sentiment in the AI sector improved following CoreWeave’s (CRWV: +24.7%) earnings report: the company beat expectations, issued a forecast above the consensus, reported a $132.5 billion order backlog, and pledged not to increase the parent company’s unsecured debt through the end of 2027.

According to the FT, demand for Anthropic’s shares during its IPO could push its valuation above $1.5 trillion, while the company does not plan to renew its contract with SpaceX (SPCX) after the middle of next year. OpenAI’s third-quarter revenue, according to media reports, rose 50% to approximately $10 billion, following a 17–18% increase three months earlier. Costco (COST) announced a special dividend of $30 per share and approved a $4 billion share buyback program. Rumble (RUM: +16.6%) reported that its AI GPU capacity is nearly sold out. Mercury Systems (MRCY: +5.7%) beat market consensus estimates and raised its own guidance. Insider buying picked up in Six Flags (FUN: +9.3%) shares. Grocery Outlet (GO: -6.4%) lowered its EBITDA forecast due to rising costs. Alcon (ALC: -2.2%) shares fell in response to weak performance in the implants segment.

This article was AI-translated and verified by a human editor