Crypto News: The Forecast: Nvidia won’t be slowed down

Welcome back to The Forecast, a new Sunday newsletter from Bloomberg's Weekend Edition. We're here to help you think about the future — from next week to next decade — with predictions and analysis from around the world. This week we're looking at Nvidia, tariffs, shoplifting and hydrogen wildcatting.

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Monday: G20 leaders gather in Rio de Janeiro, where Biden will continue to be quizzed about Trump. Earnings from Xiaomi, the Chinese smartphone maker, will provide an update on its nascent electric-vehicle business as well as the prospect of tariffs.

Tuesday: Earnings from Walmart and Lowe's will offer a view of the US consumer; Canada and the Eurozone report CPI; and in Hong Kong, a mass sentencing of pro-democracy activists is expected.

Wednesday: Nvidia reports earnings (more below); Bank Indonesia will likely hold interest rates steady; the UK and South Africa report CPI; and Chinese banks are expected to keep their one-year lending rate unchanged.

Thursday: US home sales in October are forecast to have increased, driven by lower mortgage rates — but Bloomberg Economics expects that uptick to be short-lived. Turkey's central bank will likely keep interest rates unchanged while South Africa's is expected to cut them; Baidu, the Chinese search engine, reports earnings.

Friday: Japan's October CPI is forecast to show inflation climbing; Mexico reports GDP.

Nvidia earnings are a moment when all macro investors pause to take notice. That's because the company has been — by far — the top contributor to returns in the S&P 500 in 2024.

After nearly tripling its market cap this year, expectations for Nvidia's report on Nov. 20 are understandably high. But if earnings from its main chip supplier Taiwan Semiconductor Manufacturing Co. offer any clues, AI demand is still booming. The more interesting question is whether Donald Trump's promise of renewed trade wars can break the world's most valuable company. The short answer is that it's unlikely.

First, it bears noting that Nvidia's China business has been significantly reduced by existing trade sanctions. In 2021, the company's revenue exposure to China was nearly 25%. That number was 12% as of the last reporting quarter. That decline didn't stop the company's earnings from exploding over the past year, rapidly making the chipmaker one of the top profit growth drivers in the S&P 500.

Second, Nvidia enjoys plenty of demand at home in the US. The chipmaker's biggest customers, including Microsoft, Alphabet, Amazon and Meta, plowed a combined $59 billion into data center gear and other fixed assets in the third quarter and pledged to spend even more in the year ahead.

Still, a universal tariff beyond China brings more unknowns. Nvidia derived 57% of its revenue from abroad last quarter, so this scenario could be more of a headwind for the company — and by extension, the entire stock market.

When Trump's first round of tariffs were announced in 2018, Nvidia's stock plunged 31%. But the AI boom was not yet fully underway. Spending on generative AI may reach $200 billion in 2025, Bloomberg Intelligence estimates, and Nvidia will be on the receiving end of much of that. Its own executives have said that demand for the company's new Blackwell chips is "well above supply." In 2025, sturdier fundamentals will ultimately offset any trade-fueled weakness.

—Tatiana Darie, Bloomberg Markets Live; with additional analysis by Ian King.

"Before the [US election], managers were rating a 'no landing' — in which there is no significant economic slowdown and rates have to rise again — as a 25% shot. After the election, that rose to 33%." — John Authers, Bloomberg Opinion

"Currency strategists are ripping up forecasts for the euro in the wake of the US election and coming up with a new call: a slide toward parity with the dollar… 'This is the worst-case scenario you can think of for the euro,' said Mark McCormick, the global head of FX and EM strategy at TD Securities." — Naomi Tajitsu and Anchalee Worrachate, Bloomberg News

"Berkshire [is] actively selling assets and stashing the proceeds in cash — as if there's a major correction coming." — Edward Harrison, The Everything Risk

"AI companies are now seeing diminishing returns from their costly efforts to build newer models… 'The AGI bubble is bursting a little bit,' said Margaret Mitchell, chief ethics scientist at AI startup Hugging Face." — Rachel Metz, Shirin Ghaffary, Dina Bass, and Julia Love, Bloomberg News

"A new Gold Rush is taking shape on a quiet stretch of Kansas prairie. There, a clutch of startups… are searching below the surface for naturally occurring hydrogen." — Michelle Ma and David R Baker, Bloomberg Green

"Retailers are considering something new [to deter shoplifting]: weaving radio-emitting threads into some clothing, turning the garments themselves into anti-theft devices." — Clara Hernanz Lizarraga, Businessweek

If Donald Trump follows through on his promised tariffs, the US will likely trade much, much less with other countries. Could that end or even reverse the era of trade liberalization begun in the 1980s? Perhaps not.

Bloomberg Economics' model of Trump's proposed tariffs expects that other countries will offset most of their lost trade with the US simply by trading more with each other.

"The US is a major partner for many countries, but compared with the rest of the world taken together it's still actually quite small," says Maeva Cousin of Bloomberg Economics.

The catch is politics. This forecast assumes countries retaliate against the US but are still open to trading with each other. What would it take for global trade to really dip? "US trade policy could inspire copycats," she says. You can read the full interview here.

—Walter Frick, Weekend Edition

71%

The chance Trump imposes "large" tariffs in his first year, defined by the prediction market Kalshi as roughly doubling to a 6% average-weighted tariff.

Prediction markets covering policy in Trump's first term have much less trading volume than did election markets, but here are a few more to watch: 74% chance the US withdraws from the Paris agreement in Trump's first 100 days (Kalshi); 91% chance Trump issues a deportation-related executive order within 100 days (Polymarket); 18% chance Jerome Powell is not Fed chair by end of 2025 (Kalshi). (All figures are as of 4 p.m. ET Friday.)