Are AI stocks starting to lose their luster?

After Nvidia delivered record earnings (again) last week, smashing analysts’ expectations with $30 billion in quarterly sales, the company’s share price dropped almost 7%. It took several other chipmakers’ stock down with it, including Broadcom, Intel, ARM Holdings and Marvell. And while Nvidia has gradually recovered, it’s still trading significantly lower than the days leading up to its earning report.

In general, last week’s stock tumble was an Nvidia thing, not a market swing. While Nvidia’s stock was tumbling last Thursday, the Dow Jones Industrial Average posted a record high. Nvidia isn’t on the Dow, but its shares often point to the way that markets are trending.

The reason that Nvidia’s blockbuster earnings resulted in lackluster stock prices has been debated by analysts since last week. Some said Nvidia’s next quarter projections aren’t as exponentially high as investors wanted to see. Some said that considering its runaway success in the recent past, there are no numbers that Nvidia could post that would be seen as enough. Others say that this is why investors are coming back to reality on AI chip stocks.

While Nvidia has been making voluminous sales and expects to drive billions of dollars in new revenues with its new Blackwell platform in Q4, the time is drawing closer when investors will rely on performance and not just hype. While AI technology has enormous potential and capabilities, it remains to be seen whether it can drive the changes that investors have been betting on.

One industry that has been in a slower period for a couple of years is toys. As revenues and growth went down, Hasbro put a complete turnaround into effect, revamping everything from inventory management to supply chain to entering more lucrative segments. I talked to Hasbro CFO Gina Goetter about the turnaround. An excerpt from our conversation is later in this newsletter.

People walk past the New York Stock Exchange.

Broad economic indicators continued to hit high notes before the three-day Labor Day holiday. On Friday, the Dow Jones Industrial Average closed at a record high, the fourth time it broke a closing record last week. And on Friday, it wasn’t just the Dow that surged. The S&P and Nasdaq also had a good day, each seeing more than 1% growth at closing.

Traders’ optimism was buoyed by positive economic reports at the end of the week. On Thursday, the federal government revised Q2 gross domestic product growth upward, from 2.8% to 3%, due to increased actual consumer spending. On Friday, the Commerce Department’s consumer spending report saw a modest increase of 0.2% in........

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