US Stock Market Weekly: A Top-Heavy Rebound, with AI Earnings Resilience and Rate Hike Expectations in a Tug-of-War

Last week (August 24–28), the three major US stock indices closed with slight gains, $Nasdaq Composite Index (.IXIC.US)$ the Nasdaq rose 0.85%, $S&P 500 Index (.SPX.US)$ the S&P 500 gained 0.49%, $Dow Jones Industrial Average (.DJI.US)$ and the Dow Jones Industrial Average increased by 0.53%. On the surface, the market appeared to continue its rebound momentum, but beneath the calm indices lay turbulent undercurrents. This was a typical "top-heavy" market scenario. The most telling indicator is market breadth: the equal-weighted index (RSP) fell 0.44%, and the Russell 2000 small-cap index dropped 1.51%, implying that the index gains were almost entirely propped up by a few giants. Throughout the week, $Microsoft (MSFT.US)$ Microsoft surged 6.27%, $Meta Platforms (META.US)$ Meta rose 5.11%, while the majority of individual stocks actually declined. Such a rally driven unilaterally by heavyweight stocks often suggests that risk appetite is not as solid as the indices imply; once these giants lose steam, the indices could retract quickly.

Two Core Events

The week's market performance was driven by two heavyweight events.

The first was NVIDIA's Q2 earnings report released after hours on Wednesday.The financial results showed NVIDIA's Q2 revenue reached $96.2 billion, a 106% year-over-year increase, with Q3 guidance set at $108 billion, once again confirming the strong and sustained demand for AI computing power. The stock surged 8.74% in a single day on Thursday, igniting a frenzy in the tech sector; however, it faced profit-taking on Friday, dropping 4.57%, and ended the week with a slight gain of 1.32% to close at $217.55. This 'sell on news' pattern reveals that even with impressive earnings, shareholder bases become unstable when stock prices are already at high levels.

Second, Federal Reserve Governor Wallish made his hawkish debut at Jackson Hole.Following his speech, the market's probability of a rate hike in September jumped rapidly from 35% to 57.5%. The yield on the 2-year US Treasury note rose 12 basis points for the week to 4.31%, the US Dollar Index climbed back above 99, while gold fell 2.6% to $4,504. The sharp shift in interest rate expectations became the core variable suppressing high-valuation growth stocks and gold.

Sector Rotation: Internal Divergence in AI, Hardware Ceding Ground to Software, Energy Pulls Back

At the sector level, clear rotation and divergence emerged. The standout performer was AI software, with Salesforce (CRM) soaring 22% for the week and CrowdStrike (CRWD) rising 14%, as the market began to reprice for 'AI truly translating into software revenue.' In contrast, the hardware chain showed divergence: the semiconductor sector overall (SOXX) fell 2.2%; while NVIDIA remained strong, its peers were weak. The memory storage segment was relatively resilient, with Western Digital and Seagate rising about 2%, and Micron dipping only slightly, as the logic of a memory shortage continued to provide support. The energy sector declined 1.51%, adjusting alongside falling oil prices; the healthcare sector dropped 1.98%, with the mRNA concept, which had surged the previous week, clearly losing momentum.

Key Focus This Week

Stock Forecasts for This Week

$NVIDIA (NVDA.US)$ Last Tuesday's quarterly report showed revenue of RMB 96.2 billion (+106%), with Q3 guidance confirmed at RMB 108 billion, validating AI demand. The stock rose +8.74% on Thursday but gave back -4.57% on Friday. This "sell the news" reaction exposed loosening筹码 (chip distribution) at high levels. With the current price near previous highs and RSI running hot, the dense overhead resistance zone at 220–225 makes a direct breakout difficult without new catalysts.This week, the stock will likely consolidate in the 205–220 range to digest profit-taking. If the broader US market corrects or semiconductor sentiment weakens, it may retrace to find support at 205–210 USD (near the 20-day moving average). It is advisable to accumulate positions in tranches within this range rather than chasing highs. Consider adding to positions only after the Q3 guidance is realized and the broader market stabilizes.

$Micron Technology (MU.US)$ Micron dipped only slightly last week, proving to be the most resilient name in the entire memory supply chain. SK Hynix has confirmed its 2027 capacity is fully sold out, and Micron’s 2026 capacity is also committed. Visibility for HBM and DRAM demand extends to 2028, making the memory shortage thesis rock-solid. The forward P/E is only ~6.7x (based on an estimated FY2027 EPS of $155), representing an extreme undervaluation for a company with revenue growth exceeding 300%. Twenty-two billion dollars in multi-year binding agreements are secured, Q3 gross margin is approximately 85%, and free cash flow is abundant. The average institutional target price is $1,573, with a 95% buy rating.$960–$980 is an excellent level for left-side accumulation. If the AI supply chain stabilizes following NVIDIA's earnings this week and weak non-farm payroll data pushes interest rates lower, Micron is poised to rebound first, breaking above $1,000 with a medium-term target of $1,300+. The memory shortage narrative remains unchanged, offering the best risk-reward ratio in the current range. Accumulate positions in tranches.

$Advanced Micro Devices (AMD.US)$ AMD corrected with the semiconductor sector last week to $473, but significantly lagged behind NVIDIA, indicating that capital has not yet fully priced in its AI progress. The MI350 series is already in mass production and shipping, directly competing with Blackwell, while the MI450 Helios rack-level system has secured commitments from OpenAI, Meta, and Oracle. With a forward P/E of approximately 27x and a PEG of only 0.4, it is cheaper than NVIDIA. Data center revenue has doubled year-over-year, accounting for more than half of the total, and it has seen 54 EPS upward revisions in the past three months, marking one of the strongest revision trajectories in the S&P 500. Its Beta of 2.47 indicates high elasticity.$460–$480 is the ideal entry zone. If NVIDIA's strong earnings drive a sector rebound this week, AMD could quickly recover to $500 and move toward $550. Even if NVIDIA's results are flat, AMD's downside is limited due to its lower valuation and increasing design wins. We recommend accumulating positions in tranches, with a stop-loss reference at $450.

$Alphabet-A (GOOGL.US)$ Google resisted the downturn last week, standing out as one of the few stable stocks among the Magnificent Seven. Q2 revenue grew +24%, cloud business +82%, and free cash flow reached $53 billion, demonstrating solid fundamentals. Berkshire Hathaway holds a $24.2 billion position and continues to add, providing strong endorsement. The forward P/E is approximately 17.2x, the lowest among the seven giants and below its own five-year P/E floor of 20.3. Ninety percent of institutions rate it a Buy, with an average target price of $427 and a high of $515. As a valuation洼地 (depression) with defensive attributes, downside space is limited while upside offers re-rating potential.$340–$350 is suitable for steady accumulation. Regardless of NVIDIA's earnings results, Google's low valuation and cash flow defensiveness keep drawdowns controlled, with a medium-term target above $400. We recommend allocating it as a portfolio anchor in tranches. Avoid heavy positions before the non-farm payrolls release; wait for clearer signals from the Fed meeting before adding more.

$Broadcom (AVGO.US)$ Broadcom releases its earnings after the bell this Wednesday. Pricing for AI custom chips (TPU/XPU and VMware integration) will serve as an anchor for the semiconductor sector. The market is closely watching its AI revenue guidance and gross margin trends, making this a strong event-driven play. Valuation is reasonable, free cash flow is strong, and dividends are growing steadily, with the technical chart following an upward channel. However, volatility will amplify ahead of the earnings report, and implied volatility in options is high; direction will depend on the magnitude of any guidance beat.It is advisable to take small speculative positions before earnings rather than betting heavily on direction. If AI guidance exceeds expectations, the stock may gap up to challenge previous highs; otherwise, a retracement to the annual moving average (around $200) would provide a better entry point. Strict position sizing and stop-losses are required for event-driven trades. Decide on the pace of adding to positions only after the earnings report is released.

Summary

The most critical variable this week isthe September 4 Non-Farm Payrolls report,with market expectations for a gain of 58,000 jobs and an unemployment rate of 4.1%. The data will directly set the tone forthe direction of the FOMC meeting on September 16.Given the historical pattern that September is often the weakest month for US stocks, and with major indices hovering near highs, it is advisable to keep total exposure between 40% and 50% ahead of the NFP release. In short, the current market is caught in a tug-of-war between "strong AI earnings" and "Expectations of interest rate hikes are intensifying".

Disclaimer:The above content is based on public data and quantitative analysis and is for reference only; it does not constitute investment advice. The market involves risks, so invest with caution. Any investment decision should be made independently based on personal risk tolerance, financial status, and investment objectives, consulting licensed professional institutions when necessary. Past performance does not indicate future returns.

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