09/24/2025
Sep 24 Pre-Market Analysis
Federal Reserve Chairman Powell made no new comments on Tuesday, but his speech provided an excuse for some minor profit-taking in a heated market. However, bargain hunters showed some interest on Wednesday morning.
Some bears continue to scoff at the recent announcements of massive AI spending. The Nvidia-OpenAI deal stands out: Nvidia invested in OpenAI, which then used the funds to purchase more Nvidia AI chips. This type of supplier financing is not new, but it appears aggressive to those who seek to label the AI industry a bubble.
Despite negative voices, AI spending continues to expand. Chinese tech giant Alibaba announced a $53 billion investment in AI, sending its stock price soaring 9% overnight. Micron also saw a 46% revenue increase driven by AI spending.
Despite the staggering scale of AI investment, many investors are looking for reasons for a market correction, as major stock indices near record highs and the S&P 500 has not fallen more than 2% for 107 consecutive trading days. AI spending is a natural target for bears seeking to prove the market is overly optimistic.
I recommend focusing more on individual stock performance and less on index fluctuations. Small-cap stocks and the "Big Seven" are rotating higher, leading the market, a clear shift in market dynamics. After lagging on Tuesday, the "Big Seven" regained their lead in early trading on Wednesday.
The most critical trend at the moment is strong individual stock momentum. Hundreds of stocks have hit new highs, many with reasonable gains and undemanding valuations. Opportunities currently exist in sectors such as biotech.
With most individual stocks preparing for third-quarter earnings, a moderate period of consolidation is essential. The business media often obsess over index fluctuations, overlooking the numerous outperforming stocks in the market. Investors should focus on individual stocks, not index headlines.
