Wall Street Hates September: Ameriprise’s Saglimbene

Concentration Risk & Revenue - The report identifies two types of concentration risk: weighting in key benchmark indexes and concentration of revenue driven by specific clients [1] - Concerns exist regarding revenue concentration, particularly with hyperscalers, with investors seeking return on investment and expressing unease about CapEx [2][4][5] - Nvidia's AI position is strong, but execution is key, with hyperscalers playing a dominant role in driving revenue [4] - Magnificent Seven companies account for approximately 40% of Nvidia's revenue, raising concerns about payback and return on investment for investors in those companies [4] Market Performance & Sentiment - Despite concerns, the Nasdaq finished August up for the fifth straight month, driven by the Magnificent Seven [5] - September is historically a weaker month for Wall Street, contributing to current market conditions [5] - Nvidia's year-to-date performance is up 25%, despite recent declines, highlighting the impact of concentration in revenue sources and the Magnificent Seven [7] - A rotation out of big tech is occurring, with financials, energy, and materials performing well in August [9] Fundamentals & Outlook - Fundamentals for Nvidia and technology as a whole remain solid, but execution is crucial [6][10] - Earnings expectations for Nvidia and big tech in the Magnificent Seven increased over the last two months [10] - Investors should anticipate volatility around concentrated names in major indexes due to stretched valuations [10]