Wall Street Brunch: Nvidia Time

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The chipmaker’s numbers could signal if the AI trade still has legs. (0:17) Post-Jackson Hole, the Fed’s favorite inflation gauge hits. (1:54) European post offices pause package shipments to the U.S. (3:19)

The following is an abridged transcript:

The 800 lb. earnings gorilla hoves into view this week as Nvidia (NASDAQ:NVDA) reports earnings on Wednesday.

The consensus for the biggest company on Wall Street is for EPS of $1.01 on revenue of $46 billion. The temporary ban on H20 processors to China that took effect in April is expected to have just a minimal impact on quarterly performance. The Trump administration recently removed the ban in exchange for a 15% slice of sales revenue, which Oppenheimer expects to be offset by price increases.

SA analyst KM Capital, which has a Strong Buy on the stock, says reasons for bullishness ahead of earnings “include accelerating AI tailwinds as well as Nvidia’s dominance in the industry. Moreover, Nvidia is a real earnings surprise champion that very rarely misses consensus forecasts.”

The recent pullback “looks like a prime opportunity to buy NVDA before earnings,” they said.

But SA analyst Bears of Wall Street says “here’s a possibility that we’re in the middle of the AI bubble since the capital returns by hyperscalers on AI hardware might yield limited returns, while the current record rate of capital expenditures on AI infrastructure is unsustainable.”

“Considering Nvidia’s great exposure to a handful of customers that generate a significant portion of its sales, there’s a risk that if the bubble pops soon, then the company’s growth opportunities will be limited, while its shares might collapse from the current levels,” they said.

Along with Nvidia, 14 other S&P 500 companies will report earnings this week.

On the calendar:

• Bank of Montreal (BMO), MongoDB (MDB) and Okta (OKTA) report numbers on Tuesday.
• Along with Nvidia, Crowdstrike (CRWD), Snowflake (SNOW) and HP (HPQ) weigh in on Wednesday.
• On Thursday, Dell (DELL), Dollar General (DG), Li Auto (LI), Ulta Beauty (ULTA) and Best Buy (BBY) issue numbers.
• Alibaba (BABA) reports Friday.

Looking to the economy, traders are adjusting to the post-Jackson Hole macro environment.

Following Fed Chairman Jay Powell’s speech on Friday odds of a September quarter-point rate cut rebounded and are now at 75% (lower than they were immediately post-Powell). Another cut of 25 bps is priced in through the end of the year, with a one-in-four chance of 50 bps of cuts in total.

Dario Perkins, managing director of global macro at T.S. Lombard, says: “Surprising to see Powell offer such a clear policy signal with so much data before the next FOMC meeting (and yes, was a clear signal).”

Neil Dutta, head of economics at Renaissance Macro Research, says: “This is about the September Fed meeting. If you get solid economic data, you’ll get a hawkish cut in September. If you get bad data, you’ll get a dovish cut.”

“That’s how to think about this. Through the lens of an insurance cut being green lit in September. Powell did not lay the ground work for a series of rate cuts.”

This Friday, the Fed will get the latest measure of its favorite inflation gauge, the core PCE price index. That arrives with the July income and spending figures.

Economists are expecting a rise of 0.3%. That would boost the annual rate to 2.9%, the highest since February.

Wells Fargo economists say: “Tariff-related price pressures are broadening across the goods sector and appear to be spilling over into the services sector.”

“We ultimately expect core PCE inflation to peak slightly above 3% by the end of the year,” they said. “With inflation drifting in the wrong direction and the labor market losing momentum, the Federal Reserve faces difficult trade-offs in balancing its dual mandate.”

In the news this weekend, lack of clarity on rules about package exemptions is leading to a pause on shipping of packages by a host of European nations to the U.S.

The “de minimus” exemption allows packages worth less than $800 to come into the U.S. duty free. It is set to expire on Friday, August 29.

Postal services in Germany, Denmark, Sweden and Italy said on Saturday they will stop shipping most merchandise to the U.S. effective immediately. France and Austria will follow on Monday. The U.K.’s Royal Mail said it would halt shipments to the U.S. on Tuesday to allow time for those packages to arrive before duties kick in.

Spotify (SPOT) plans further price increases for customers as it invests in new features and pursues a goal of 1 billion users, according to a senior executive.

Alex Norström, co-president and chief business officer, told the Financial Times that price rises were “part of our toolbox now” after many years of keeping them flat.

Spotify is developing features to provide more value and “stickiness” for subscribers. The company recently added a way to customize transitions between tracks on its nearly 9 billion user-created playlists. It has also expanded its services to include audiobooks and podcasts, as well as tools like an AI DJ.

And for income investors, Johnson & Johnson (JNJ) and S&P Global (SPGI) go ex-dividend on Tuesday. J&J pays out on Sept. 9 and S&P Global pays out on Sept. 10.

Hyatt (H) goes ex-dividend on Wednesday, paying out on Sept. 10.

Tyson Foods (TSN) goes ex-dividend on Friday, with a Sept. 12 payout date.