Staring at NVIDIA's financial report, it's more than just the tech industry

The frenzy surrounding the field of artificial intelligence is rapidly spreading in the stock market. In the early hours of Thursday Beijing time, "the most important stock on Earth" NVIDIA will announce its first-quarter financial report.

As the third largest weighting stock in the S&P 500 index, setting the trend for the entire AI market, NVIDIA's performance will obviously not only affect chip stocks. From the internet to energy to utilities and other industries, all are eagerly awaiting NVIDIA's explosive strong financial report, injecting upward momentum into the sector.

According to data from Bank of America, the number of times AI has been mentioned in earnings conference calls by listed companies has surged by 186% since the first quarter of 2023. Initially, the market only focused on AI chip manufacturers like NVIDIA and AMD, but soon the AI craze spread to terminal application companies such as Google, Meta, Amazon, and Microsoft.

Now, Wall Street analysts have expanded their focus to industries such as energy, utilities, and commodities, believing that AI development will lead to a surge in demand for computing power, thereby benefiting these industries.

This shift has already manifested in the market. The non-ferrous metal sector, such as copper used as raw material for cables, is believed to benefit from AI spending, with prices hitting recent highs. Energy and utilities are the top two performing sectors in the S&P 500 index this year, rising by about 15% and 13% respectively. U.S. power stocks Rizhida and United Energy, following NVIDIA, have seen their stock prices skyrocket, rising by about 140% and 90% respectively this year.

Mike Wilson, Chief Investment Officer at Morgan Stanley, in a report last Sunday, rated the utilities sector as "overweight," citing that the sector "could benefit from the energy demand theme brought by AI." He expects that driven by AI data center demand, the proportion of electricity consumed for AI in the United States may increase from around 3% in 2023 to about 10% by 2030.

Wilson believes:

Whether traditional energy providers or new energy companies, as long as they obtain more favorable data center power supply agreements, profit expectations can be raised.

Energy companies are also emphasizing their role in AI development. The stock strategy team at Goldman Sachs stated that in the first quarter of this year, the proportion of energy industry executives mentioning AI in conference calls surged from 19.1% in the previous quarter to over 66%.

So far, NVIDIA's performance has consistently exceeded market expectations, and there are no signs of cooling in demand for AI server chips.

However, if there are signs of a slowdown in this demand in NVIDIA's first-quarter financial report, it may trigger a major adjustment across various sectors from AI applications to electricity.

Jack Manley, Global Market Strategist at J.P. Morgan Asset Management, warned:

If the market finally realizes that it has been overly excited about AI, has prematurely discounted some profit expectations, and this is reflected in valuations, it could lead to a period of turbulence