Markets
markets
Luke Kawa

The biggest momentum ETF has lost its mojo by exiling the world’s only $4 trillion company

If you asked random people on the street — even those with only a passing interest in the stock market — what the most important and successful stock in the US has been lately, I’m guessing you’d get one answer that would stand head and shoulders above the rest:

SiessNvidia

It’s Nvidia, duh. The world’s only $4 trillion market cap company. And it got to be that way by being a stock that went up, a lot, very consistently. In other words, it was an obvious momentum stock.

Yet, when the iShares MSCI USA Momentum Factor ETF rebalanced its portfolio near the end of May, the chip designer was excluded from the ETF for the first time since Q1 2023. Nvidia had been in the top six holdings of the fund from Q2 2023, when its blockbuster earnings in May unofficially kicked the AI boom into high gear, through Q1 2025. And now, it’s gone.

The fund clearly is missing out on this loss of a former stalwart: quarter to date, Nvidia is up 8% in breaching the $4 trillion threshold, with its latest rally spurred by the easing of AI chip sales to China, while MTUM is down 1%.

MTUM’s constituents are determined by an algorithm that selects the stocks with the best risk-adjusted price momentum. It cannot be denied that there was a long period of time when Nvidia simply failed to demonstrate much momentum, and did experience some massive volatility. Shares were basically flat from late October 2024 through late June 2025, amid major drawdowns fostered by the DeepSeek freak-out and meltdown in momentum stocks that slightly preceded the subsequent tariff threats and announcements.

It’s easier to be correlated with something when you’re a part of its whole. And Nvidia is charting a distinctly different path now that it’s been cast out of the group.

The 21-session correlation between the daily swings in Nvidia and MTUM has dropped off monumentally, back down to (you guessed it) the lows it saw around the time it was last being added to the fund.

More Markets

See all Markets
Bull with Nose Ring

US stocks end volatile week on a positive note

The S&P 500 and Nasdaq 100 both ended well in the green, while the Russell 2000 suffered a loss.

Toby Bochan10/17/25
markets
Matt Phillips

Margins, and selling the news: analysts look to explain Oracle’s tumble

The somewhat counterintuitive tumble in Oracle shares continued into afternoon trading Friday, despite Wall Street analysts’ more or less favorable reaction to Oracle’s investor day presentation Thursday, where executives said the company’s AI cloud business would eventually sport margins of between 30% and 40%, far better than the figures reported by The Information back on September 7.

And yet, the stock is on its way to its worst day in the last six months. What gives?

Gil Lauria, who covers Oracle for D.A. Davidson & Co. — who has it at “hold” with a $300 price target — has a theory, telling Sherwood News:

“Investors are disappointed that the entire growth acceleration in Oracle is from the Oracle Cloud Infrastructure business, and that Oracle expects the rest of the business to grow low single digits.

The other disappointment came from Oracle acknowledging that the GPU rental business only had 30-40% gross margins, far lower than the 80% gross margins for the rest of the business.”

Other analysts we’ve chatted with on background say they’re not convinced the margin story is the source of today’s slump, suggesting the also plausible explanation that the drop might just be a sign traders bought the stock ahead of the presentation to analysts on Thursday anticipating positive announcements, and now they’re selling simply selling the news.

Analysts generally like what they heard from Oracle, but shares are down

Analysts generally like what they heard from Oracle, but shares are down

Gil Lauria, who covers Oracle for D.A. Davidson & Co. — who has it at “hold” with a $300 price target — has a theory, telling Sherwood News:

“Investors are disappointed that the entire growth acceleration in Oracle is from the Oracle Cloud Infrastructure business, and that Oracle expects the rest of the business to grow low single digits.

The other disappointment came from Oracle acknowledging that the GPU rental business only had 30-40% gross margins, far lower than the 80% gross margins for the rest of the business.”

Other analysts we’ve chatted with on background say they’re not convinced the margin story is the source of today’s slump, suggesting the also plausible explanation that the drop might just be a sign traders bought the stock ahead of the presentation to analysts on Thursday anticipating positive announcements, and now they’re selling simply selling the news.

markets
Jon Keegan

Analysts generally like what they heard from Oracle, but shares are down

The big news out from the Oracle AI World conference was broadly positive: that margins on cloud infrastructure can be as high as 35%, and that the company predicts $166 billion in infrastructure revenue by 2030.

And in the wake of that news, today UBS raised its price target for Oracle shares to $380 from $360, saying they are undervalued.

But investors appear to have some concerns about Oracle’s huge capex plans, which are fueled by huge AI infrastructure deals with OpenAI and Meta, as shares dropped over 7% in Friday trading.

Analysts have pointed to Oracle’s high cash burn as it pursues its AI build-out and potential financing needs as flies in the ointment that could blunt the impact of the company’s strong longer-term growth forecasts.

On Friday, Jefferies analysts wrote:

“Questions remain about ORCL’s capex requirements to meet growing demand, as there was no forward-looking commentary on capex at the Analyst Day. Capex will need to ramp in line with [Oracle cloud infrastructure] revenue growth, raising concerns about ORCL’s financing options to support this expansion.”

However, if that’s the reason why the stock is getting hit today, it would mark a distinct change in how investors are evaluating the AI trade. Companies have tended to be increasingly rewarded for their aggressive capex commitments to enhance the boom, based on optimism that investments in this would-be revolutionary technology will bear fruit.

Friday’s dip comes on the back of a strong run leading up to the yesterday’s investor conference, fueled by a flurry of AI headlines. Oracle shares have gained over 18% in the past three months and more than 70% so far this year, well outpacing the Nasdaq’s approximately 7% and 16% rise over the same time periods.

markets
Matt Phillips

AST SpaceMobile drops after Barclays cuts rating to “underweight”

AST SpaceMobile, which provides cellular services from space, dove in early trading after Barclays analysts cut their rating on the shares to “underweight” (essentially a sell) from “overweight” (or a buy), citing “excessive” valuation on the still money-burning company. The fact that analysts went from “buy” to “sell” — with no momentary stop at a “hold” or “neutral” rating — makes it a fairly rare “double downgrade.”

They wrote:

“Valuation has run ahead of fundamentals... In our last update, we increased our price target from $38 to $60 as we took a more constructive view on pricing; we found it supportive that TMUS/Starlink launched a text only service for $10 per month and believe that AST products which will be richer (text, call, broadband) could see higher prices points. Since then the stock price has doubled from $48 to $95.7.”

With the shares up almost 120% over the last month through Thursday, and a price-to-forward-sales ratio of 140x — the Nasdaq Composite is around 5x — the stock might be due for a cooling-off period.

'There's nothing perfect in this world of growing apples.' Extreme weather could complicate future harvests.

The remarkable rise of the Honeycrisp and Cosmic Crisp apples

When it comes to apples, America cannot get enough of the crunch factor.

David Crowther, Claire Yubin Oh10/17/25

Latest Stories

Sherwood Media, LLC produces fresh and unique perspectives on topical financial news and is a fully owned subsidiary of Robinhood Markets, Inc., and any views expressed here do not necessarily reflect the views of any other Robinhood affiliate, including Robinhood Markets, Inc., Robinhood Financial LLC, Robinhood Securities, LLC, Robinhood Crypto, LLC, or Robinhood Money, LLC.
©2025 Sherwood Media, LLC