Nvidia(US:NVDA) Goldman Sachs·2026-01-12 01:41Investment Rating - The report suggests a potential interest rate cut by the Federal Reserve in December, indicating a cautious outlook on the economy [1][3][6]. Core Insights - The unemployment rate in the U.S. has risen to 4.4%, indicating a softening labor market, which may lead the Federal Reserve to lower interest rates [1][2][6]. - The report highlights an increase in AI-related bond issuances, with TMT companies issuing nearly $200 billion in corporate bonds this year, of which $100 billion is AI-related debt, impacting the credit market negatively [1][11]. - The anticipated fiscal stimulus in the first half of 2026, combined with lower interest rates, is expected to influence the yield curve positively [1][8]. Summary by Sections Employment Data - Recent employment reports show an addition of 119,000 jobs in September, with the unemployment rate increasing to 4.4% and sustained claims reaching new highs, indicating more slack in the labor market [2][6]. Federal Reserve's Rate Outlook - The Federal Reserve is expected to cut rates by 25 basis points in December, with internal divisions among FOMC members regarding the continuation of rate cuts [3][5][7]. Economic Data Impact - The upcoming November employment report is crucial for the Fed's decision-making, with limited significant data expected before the December meeting [5]. Fiscal Policy and Yield Curve - A significant fiscal stimulus is projected for 2026, which, along with easing financial conditions, is expected to alleviate concerns about fiscal sustainability and reduce pressure on the long-end of the yield curve [1][8][9]. Credit Market Challenges - The credit market faces challenges from a surge in new bond issuances, particularly in the AI sector, which has strained the market's ability to absorb risk [10][12]. Global Stock Strategy - Diversified investment strategies have performed well, with U.S. stocks up approximately 11.5% this year, while European markets have seen even higher returns, indicating the effectiveness of geographical diversification [13]. Long-term Equity Forecast - The report forecasts a 10-year total return rate of 7.7%, with U.S. returns expected around 6.5%, reflecting a lower return environment compared to recent years [14]. AI Sector Valuation - The AI sector is not currently in a bubble, as valuations remain reasonable compared to historical peaks, suggesting a strong fundamental basis for growth [15]. Nvidia's Performance - Nvidia's recent announcements indicate strong growth in data center revenues, with a 59% increase, and expectations for continued robust performance in the coming quarters [16].