In the fast-paced world of artificial intelligence (AI) and technology, companies are facing tougher questions than ever before. According to Dan Niles of Niles Investment Management, the upcoming earnings season could be a pivotal moment for the market as investors start to demand answers on the return on investment in AI.
Niles warned that there is a growing fear of missing out on AI opportunities, but companies will soon have to justify their investments in the technology. He emphasized that the market is approaching a critical moment where traders will scrutinize which businesses will emerge as long-term winners in the tech sector.
“It’s time for a reality check,” Niles said on CNBC’s “Fast Money.” “Not every company is Nvidia.”
Meanwhile, the Nasdaq Composite has emerged as the clear winner since the market’s October low, soaring 41.77% through Monday’s close. In comparison, the S&P 500 has climbed 32.93%, the Russell 2000 index has risen 23.52%, and the Dow Jones Industrial Average has lagged behind with a 19.62% increase.
In other news, Chegg shares surged over 22% in after-hours trading following the announcement of a restructuring plan that includes job cuts. The education technology company aims to achieve EBITDA margins of at least 30% by the 2025 fiscal year.
Additionally, Lennar and La-Z-Boy experienced contrasting reactions from investors after reporting their earnings. While Lennar fell 2.5% despite beating expectations for the second fiscal quarter, La-Z-Boy saw a more than 10% jump as its earnings surpassed Wall Street predictions.
As the market continues to navigate uncertainties, stock futures remained relatively unchanged, with Dow futures up 0.1% and S&P 500 and Nasdaq 100 futures showing little movement.
Overall, the tech sector is facing a critical moment of truth, and companies will need to provide concrete answers on their AI investments to satisfy investors’ growing demands.
