As short-term market debate continues to create a weekly seesaw, last week’s gains further reinforce the resilience of the underlying trend. Our trend-following framework remains intact, supporting our strategy to stay the course, maintain full investment, and let the trend guide our positioning.
Feet on Both Pedals: Nvidia Accelerates, While Warsh Taps the Brake
Wall Street spent the week driving with one foot on the accelerator and the other hovering over the brake. Nvidia supplied the horsepower, delivering another blockbuster quarter that showed the AI infrastructure buildout is still gathering speed. Federal Reserve Chair Kevin Warsh supplied the caution light, using his first Jackson Hole keynote to remind investors that inflation remains too high and another rate hike may be necessary. Both messages arrived in the same 48 hours. The market responded by flooring it and tapping the brake at the same time, which is not generally recommended in driver's ed.
The Score This Week
The S&P 500 gained 0.50% for the week, while the Dow also advanced 0.53% and the Nasdaq rose 0.85%. Small caps traveled in the opposite direction: the Russell 2000 declined 1.49%, reflecting their greater sensitivity to borrowing costs — a reminder that not every car in this convoy has the same horsepower-to-debt ratio.
The bond market reacted most clearly to Warsh's speech at Jackson Hole. The two-year Treasury yield jumped 12 bps on Friday to 4.34% as traders raised the probability of a September rate hike from 36% to 58%. Longer-term yields moved less, suggesting the market was primarily repricing near-term Fed policy rather than a permanently higher inflation outlook — a tap on the brake pedal, not a U-turn.
Gold reversed sharply after Jackson Hole. The price fell more than 3.2% on Friday alone and roughly the same for the week, as higher yields and a stronger dollar reduced the appeal of an asset that, unlike the Fed, pays no interest for waiting around.
Nvidia Opens the Throttle
Nvidia once again showed why AI remains the market's most powerful engine. Quarterly revenue reached $96.2 billion, up 106% from a year earlier, while data-center revenue surged 117% to $89 billion. Management guided for approximately $108 billion of revenue next quarter and projected roughly 70% growth into the next fiscal year — the kind of number that makes analysts double-check their own math.
The report sent Nvidia up nearly 9% on Thursday, adding over $440 billion in market value in a single session, and lifted the broader technology sector along for the ride. Not every passenger enjoyed the trip equally, though: Marvell beat estimates and raised its own outlook the same week and still fell roughly 10% on Friday, a reminder that in this market, riding shotgun with Nvidia doesn't guarantee a smooth ride of your own. The results also included a couple of speed bumps worth watching. Rising memory costs are expected to put pressure on gross margins, and Nvidia's guidance assumes zero data-center computing revenue from China — a wall the company has priced in, but one that leaves real upside on the table if that market ever reopens.
Warsh Taps the Brakes
At Jackson Hole, Warsh said the Fed would still have "work to do" unless underlying inflation moved convincingly toward its 2% objective — about as close as a sitting Fed chair gets to flashing his brights at the market. July headline PCE inflation held at 3.7%, slightly above expectations, while core PCE remained at 3.3%. Real consumer spending was essentially flat, even as the personal saving rate fell to 3.0%.
That combination leaves the Fed on a narrow road. Inflation remains too high to ignore, while parts of the economy are already losing momentum. Consumer confidence fell in both the Conference Board and University of Michigan surveys. New-home sales dropped 10.5% in July, and the Chicago PMI unexpectedly fell to 47.1, returning to contraction.
Labor data also sent mixed signals. A preliminary revision showed 79,000 fewer jobs through March than previously estimated, while initial jobless claims fell to 203,000, indicating that layoffs remain limited. In other words: the fuel gauge and the check-engine light are both lit at the same time, and Warsh has to decide which one to believe.
Tariffs and Oil Take a Detour
The week's policy risks extended well beyond the Fed's dashboard. After U.S.-Canada trade negotiations collapsed, President Trump threatened 50% tariffs on Canadian cars, trucks, and auto parts beginning in 2027 — an ironic backdrop for a week already dominated by car metaphors, and a dispute that threatens one of North America's most integrated supply chains and could add real pressure to vehicle prices.
Washington also announced new sanctions against roughly 60 Iran-linked entities and vessels. The measures were less aggressive than markets had anticipated, and speculation about reopening shipping through the Strait of Hormuz reduced the energy risk premium. Brent crude ended at $89.31 per barrel, down by more than 5% for the week — one of the only line items this week that actually eased off the gas.
Checking the Dashboard
Add it all up, and the market spent the week straddling two pedals that don't usually get pressed together: an AI trade still accelerating hard enough to add nearly half a trillion dollars in a single session, and a Fed chair signaling he's not afraid to tap the brake if inflation doesn't cooperate. Tariffs and oil added a detour sign or two along the way, but neither derailed the trip. The car is still moving forward. Whether Warsh eases off entirely or actually taps the brake at the September meeting is next month's business — but he's made it clear he's got his foot hovering right there.
The Week Ahead
Next week's focus will be on the labor market, but Wall Street won't have to wait for Friday to get its next set of headlines. Dell and Palo Alto Networks report Tuesday after the close, followed by Broadcom on Wednesday — three more AI-adjacent names getting their turn in the driver's seat right as the market decides whether Nvidia's quarter was the whole story or just the opening act. On the data side, Tuesday's JOLTS report will update job openings, hiring, and worker turnover, followed later in the week by ADP private payrolls and weekly jobless claims. Friday's August employment report will be the main event, with investors watching payroll growth, unemployment and wages for clues about the Fed's September decision.
“I stand here today committed to a discipline, not to a decision.”
— Kevin Warsh, Federal Reserve Chair, August 28, 2026
NVDA The Death Star: Another Planet-Killing Quarter
NVIDIA had another monster quarter on August 26. Revenue came in at $96.2 billion, up 106% from a year ago and about $4 billion above expectations. Adjusted EPS was $2.22, also ahead of estimates, while data center revenue jumped 117% to $89 billion. And NVIDIA is not slowing down just yet — it expects about $108 billion of revenue next quarter.
It's hard to look at those numbers and not be impressed. But there's more to NVIDIA underneath all of that. A $96 billion quarter doesn't tell the whole story. The headline numbers are huge, but what's really interesting is what they tell us about the AI spending cycle, NVIDIA's growth from here, and how much longer the company can keep this pace.
NVIDIA beat expectations — and then some.
At this point, NVIDIA beating estimates isn't exactly news. The interesting part is how much it beat them by, and whether it can keep doing that.
This quarter, it did. Revenue came in more than $4 billion above expectations, and management still expects growth of around 70% in fiscal 2028. Think about that for a second. We're talking about a company already doing almost $100 billion in revenue every three months, and it's still talking about 70% growth.
That's a pretty high bar for anyone to clear.
Interestingly, everyone already knew NVIDIA would have a good quarter. I
n fact, the stock had actually fallen in the days leading up to the earnings announcement as investors worried that the market had already priced that in. Then NVIDIA beat expectations — and apparently beat expectations for “beating expectations” too. The stock jumped 8.7% the next day.
Jensen Huang: “Now, compute is revenue.”
If there were concerns that the big cloud companies might start slowing down their AI spending, NVIDIA's results didn't really help that argument. Data center revenue more than doubled again, and management continues to describe demand as being well ahead of supply. Jensen Huang was particularly direct, saying the company is seeing demand for its systems “far in excess” of supply. The hyperscalers are still spending heavily on AI infrastructure, which means the AI capex story doesn't look like it's running out of steam yet.
Of course, at some point investors will ask the other side of the question. The market isn't only concerned with how much more these companies will spend on AI. How all of that spending actually turns into revenue is truly the ultimate question.
And Jensen Huang had a pretty simple answer: “Now, compute is revenue.”
Now watch the margins.
NVIDIA's gross margin was still around 75% this quarter, but management expects it to come down to about 74% next quarter and potentially bottom around 71%–72% in Q4. The main culprit is memory. Management said memory prices have risen much more than expected, creating some “extreme pricing conditions.”
But there's an interesting twist here. NVIDIA sees the memory shortage as partly a result of the same AI boom driving its growth. In other words, AI demand is creating more demand for NVIDIA's products, but it's also creating some of the cost pressure around them.
NVIDIA is working with the major memory suppliers to add capacity and plans to raise prices beginning in fiscal 2028 to help offset some of those costs. Management expects margins to settle around 72%–73% eventually.
So maybe the next question isn't just how many chips NVIDIA can sell. It's how much money it can make on each one — and how much pricing power it can keep as the AI buildout gets even bigger.
The Death Star is still flying!
If you've been following our earlier commentaries, you might remember that we called NVIDIA the Death Star. Now the Death Star is doing $96 billion a quarter, growing more than 100% YOY — and already talking about another 70% growth in fiscal 2028!
Sounds like we all have to live another quarter under the Death Star’s shadow, where its earnings don't just move “NVIDIA” itself. They can move semiconductor stocks, AI infrastructure, memory, networking, power, data centers — and increasingly, companies and industries well beyond the chip world.
The interesting part now is whether it can keep flying at this speed. The AI story is clearly still going, but as NVIDIA gets bigger, the expectations get bigger too. At some point, the market will care less about whether NVIDIA is growing and more about whether it can keep growing this much while keeping those margins intact.
Advisory services offered through Sowell Management, a Registered Investment Advisor. The views expressed represent the opinion of Sowell Management. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and non-proprietary sources that have not been independently verified for accuracy or completeness. While Sowell Management believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Sowell Management’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Past performance is not indicative of future results.
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WEEK AHEAD
August 31 -September 4, 2026
Feet on Both Pedals: Nvidia Accelerates, While Warsh Taps the Brake
The Score This Week
Nvidia Opens the Throttle
Warsh Taps the Brakes
Tariffs and Oil Take a Detour
Checking the Dashboard
The Week Ahead
NVDA The Death Star: Another Planet-Killing Quarter
NVIDIA beat expectations — and then some.
That's a pretty high bar for anyone to clear.
Jensen Huang: “Now, compute is revenue.”
Now watch the margins.
The Death Star is still flying!
Advisory services offered through Sowell Management, a Registered Investment Advisor. The views expressed represent the opinion of Sowell Management. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and non-proprietary sources that have not been independently verified for accuracy or completeness. While Sowell Management believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Sowell Management’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Past performance is not indicative of future results.