FT’s Katie Martin: Nvidia numbers to make or break wobbling American exceptionalism trade

Key topics:Market sentiment darkens as speculative assets and tech stocks slumpPrivate equity and Big Tech strains expose deep market vulnerabilitiesNvidia earnings seen as key trigger for year-end market direction.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up for the BizNews channel here..By Katie Martin.A darker mood is setting in across markets and, alarmingly, only one company can break the funk.All of the frothiest bits of finance are now under pressure. Bitcoin — perhaps the purest gauge of speculative fervour — has dropped 29 per cent from its high and is now negative on the year.Stocks in companies that buy and store bitcoin, and do little else (yes, this is a thing), are in severe distress. Biggest of them all, Strategy (formerly MicroStrategy), is down by more than 30 per cent this year, and over 50 per cent since its summer high. Its co-founder Michael Saylor has sought to instill confidence by posting an AI-generated image of a burning, sinking ship, urging his followers to stay strong.Shares in unprofitable US tech companies have been wilting for weeks, suggesting investors, even adventurous retail investors, are starting to lose patience with the hype.This is all ominous enough, but the wobbles are not confined to the spicier bits of tech and quasi-gambling punts..Read more:.Markets ride high on speculative frenzy, ignoring bubble warnings and inflation fears.Shares in Facebook owner Meta are now flat for the year, having discarded a quarter of their value since August as investors balk at seemingly never-ending spending on artificial intelligence.Strain in private markets is not always easy to see, but a string of blow-ups has scratched nerves in the past couple of months and the value of listed private finance firms is falling well behind broader US stock markets.Absolute Strategy Research’s index capturing companies such as Blackstone, KKR and others has fallen by 13 per cent this year — the mirror image of the S&P 500. Clearly, the big recovery and ascent in benchmark US stock indices are concealing a multitude of sins. Beneath the surface, investors are proving hard to impress.The clear risk is this blossoms into a broad reckoning for markets that have been hopped up on hope since the spring of this year. Early potential signs of this are already apparent.At an index level, stocks have already backed away from recent highs, with weakness spread far and wide. In the S&P 500 index, some 407 stocks fell on Monday, the broadest sell-off in five weeks, according to Deutsche Bank. Classic signs of nerves, such as the Vix index of anticipated stock market volatility, are pushing higher. Corporate bonds, unnerved by the huge splurge of borrowing by Big Tech companies, have weakened a little too, breaking an extraordinary run of vanishing falls between corporate and government bond yields.This outbreak of measured but real alarm comes after a pretty wild party from fund managers in recent months. As Bank of America suggests in its regular survey, investors have been running the highest allocation to stocks since February, when the American exceptionalism trade was still alive and well, and scant allocations to cash. This provides a long way to fall.But the wobble should come as little surprise to anyone who has been paying attention to market excesses in recent months. All the recent talk of a “K-shaped” US economy and “K-shaped” markets, with the strongest and wealthiest holding up more than their fair share of the sky while the weakest stumble through, reflects just that.Wealth inequality and market concentration are hardly new features of US finance, but narratives have been brought to you by the letter K partly because everyone can see the same imbalances and points of vulnerability. Investors generally know full well that something here smells off, and they know that they are extremely exposed if anything were to go wrong.The easy thing to do is blame the Fed. Chair Jay Powell’s hints at the US central bank’s most recent meeting that further rate cuts are not a nailed-down certainty have clearly hit a nerve. But investors should own their own exuberance. Blaming the Fed is a little cheap.It now falls to Nvidia to make or break the mood in the final weeks of the year, with earnings results from the $4.5tn chipmaker due after markets close on Wednesday..Read more:. Nvidia’s stock split sparks retail frenzy and Dow speculation.Even the true believers in the potential of AI are getting nervous about this, with filings revealing that tech supremo Peter Thiel’s hedge fund Thiel Macro has already offloaded its entire stake in the company. If investors like the look of Nvidia’s third-quarter earnings, bulls will push for an upbeat end to the year. If not, watch out below. Concentration risk is much more fun on the way up than it may be on the way down..© 2025 The Financial Times Ltd.

FT’s Katie Martin: Nvidia numbers to make or break wobbling American exceptionalism trade

Related Stories

Piet Viljoen: Sasol’s spectacular comeback turns a battered stock into a market star

FT: SpaceX now wants $40bn for Nvidia chips. Its bonds already trade like junk.

Martin Wolf: With AI, "I told you so" will be too late

Vy Capital - the four-man band backing Musk to a $10 trillion payday