AI Trade in Focus as Nvidia Earnings and Iran Sanctions Keep Markets on Edge: Dow Jones, S&P, Nasdaq, Wall Street Futures

U.S. stock futures moved lower on Monday as investors prepared for Nvidia’s (NASDAQ:NVDA) quarterly results later in the week, with uncertainty surrounding the artificial intelligence trade combining with geopolitical tensions between Washington and Tehran to weigh on sentiment.

Markets are also looking towards Federal Reserve Chair Kevin Warsh’s appearance at Jackson Hole, where investors will search for indications about the direction of U.S. monetary policy.

U.S. Futures Fall Ahead of Nvidia Results

U.S. equity futures weakened during European trading, reflecting a cautious approach before Nvidia reports earnings on Wednesday.

Nasdaq 100 futures declined 0.6%, while S&P 500 futures were down 0.2%.

The results represent an important test for enthusiasm surrounding artificial intelligence as investors assess whether rapid growth across AI-related businesses can continue to support increasingly elevated valuations.

Particular attention will be paid to demand from major technology companies and whether their extensive spending on AI infrastructure remains strong. Nvidia’s importance extends across the wider technology sector because its processors have become central to the global expansion of AI computing capacity.

Rising Server Costs Add Another Test for AI Spending

Concerns over the economics of AI infrastructure have also increased following a Bloomberg News report that higher memory chip prices are pushing up the cost of servers equipped with Nvidia processors.

Some of Nvidia’s largest customers could reportedly face price increases exceeding 15% for systems scheduled for delivery early next year. These include servers incorporating the company’s next-generation Vera Rubin and Grace Blackwell chips.

Server manufacturers supplying major data-centre operators including Microsoft, Alphabet’s Google and Oracle have reportedly informed customers about the higher prices.

The increases create another challenge for the AI investment cycle. Technology companies are committing substantial capital to expanding computing infrastructure, but rising equipment costs could eventually place pressure on margins if spending continues at its current pace.

Washington Prepares Tougher Sanctions Against Iran

Geopolitical developments are providing another source of uncertainty, with U.S. Treasury Secretary Scott Bessent preparing to announce a new sanctions package targeting Iran.

Bessent has described the U.S. campaign as entering the “endgame” and warned that countries continuing to support Tehran could become “global pariahs.”

The measures are expected to be outlined at a conference on Monday as Washington increases economic pressure on Iran.

Iranian officials have responded by threatening to halt oil exports if the pressure continues, raising concerns about the consequences for global energy supplies.

Any further disruption to Iranian exports or shipping through the Strait of Hormuz could drive oil prices higher, potentially adding to inflation and complicating the interest-rate outlook for major central banks.

Oil Retreats After Second Consecutive Weekly Gain

Crude prices moved lower on Monday as traders locked in some profits following two successive weeks of gains.

Brent crude futures fell 1.5% to $93.16 a barrel, while U.S. West Texas Intermediate declined 1.6% to $85.70.

Both benchmarks advanced by more than 5% last week after U.S.-Iran peace negotiations stalled and oil shipments through the Strait of Hormuz remained restricted.

The waterway is critical to international energy markets, with roughly one-fifth of global oil supplies normally passing through it.

Persistently elevated crude prices could increase fuel and transportation costs and contribute to wider inflationary pressures. In turn, that could reinforce expectations that interest rates will remain higher for longer and create an additional headwind for equities.

Warsh’s Jackson Hole Speech Could Shape Rate Expectations

Federal Reserve Chair Kevin Warsh is scheduled to speak at the Jackson Hole economic symposium on Friday, providing another major event for investors this week.

Markets are not anticipating substantial forward guidance, but traders will scrutinise his comments for indications of how the Fed views inflation, economic growth and the possibility of future interest-rate cuts.

The speech comes as investors debate whether resilient economic activity and persistent inflation could restrict the central bank’s ability to loosen monetary policy.

A more hawkish message could weigh particularly heavily on highly valued growth and technology shares, while signals pointing towards easier monetary policy could provide further support for equity markets.

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