Nvidia (NVDA) stock continues its upward momentum ahead of its highly anticipated quarterly earnings report on August 28. To discuss the potential impact of the semiconductor giant’s results on the broader technology sector (XLK), Bernstein Internet Equity Research Analyst Mark Shmulik joins the Morning Brief.

Shmulik points out that the tech giants have made it clear in the AI ​​trade that “the risk of underinvesting is much higher than the risk of overinvesting.” He believes that “as long as this momentum continues,” the entire tech sector will benefit.

As for valuations of tech companies, Shmulik notes that they have cooled down and are “not demanding.” However, he stresses that companies need to “fulfill the core business that is in front of them today” to fund their ongoing AI investments. Particularly as companies like Alphabet’s Google (GOOG, GOOGL) begin to see returns on their AI investments, Shmulik points out that “it’s no longer just a theoretical discussion, it’s actually showing up in the numbers.”

When it comes to investment opportunities in the AI ​​space, Shmulik highlights Meta (META) as “one of the cleaner names” for those looking to participate in AI trading.

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This article was written by Angel Smith