AI’s Second Act: Deciphering the Pre-Market Moves in Nvidia, Palantir, and Semiconductor Picks

The Official Narrative

The mainstream narrative is that the AI trade is far from over. The Street views the Nvidia-Meta deal as a powerful validation of sustained capital expenditure by hyperscalers, projected to reach nearly $650 billion in 2026 . Mizuho’s upgrade of Palantir is seen as a signal that the recent valuation pullback in software names is a buying opportunity . Cathie Wood’s buys reinforce the “picks-and-shovels” approach to AI infrastructure .

Interpreting the Move Before the Open

The market is correctly identifying that the AI revolution is entering a new phase. It’s shifting from pure narrative around training models (Nvidia’s stronghold) to a phase of inference and deployment at scale. This is where Broadcom’s custom chips (ASICs) for hyperscalers and AMD’s push into data-center alternatives become critical. The news isn’t just about one chip deal; it’s about the broadening of the AI ecosystem. While Nvidia remains the leader, the opportunity is expanding to include specialized silicon and the software layer that deploys AI, which benefits Palantir.

Historical Context & Credibility: We’ve seen similar rotations before. After the initial dot-com boom, the winners were not just the infrastructure providers (like Cisco) but also the software and services companies that built upon that infrastructure. The current setup mirrors this: NVDA is the Cisco of this era, while PLTR aims to be the Salesforce. The credibility of this move is high because it’s backed by tangible analyst actions (Mizuho upgrade) and significant capital deployment (Cathie Wood’s buys, hyperscaler capex) .

Contrarian View: The potential trap is chasing the very names that have already run. While the news is positive, the “AI fear” selloff from recent weeks was steep for a reason—valuations remain lofty. The market’s initial positive reaction could fade if broader economic concerns (inflation, rates) re-emerge. Furthermore, the sharp 24% drop in Carvana (CVNA) post-earnings, despite strong results, serves as a stark warning that even good news may not be enough in a high-expectation environment, and this sentiment could spill over .

What Could Happen at the Open and Beyond

We should see a clear bid for semiconductor and AI-software names at the open. Capital will likely rotate out of defensives and into growth, particularly within the Nasdaq. The big question is whether this AI strength can lift the broader market or if it remains a narrow, tech-led rally. Non-tech names like CRH (CRH) , despite its strong earnings and positive outlook, may be overlooked initially as traders focus on the AI story .

Volatility & Sentiment Shift: This event lowers the “AI fear” premium, shifting sentiment decidedly to risk-on within the tech sector. However, the Carvana drop indicates that sentiment is fragile for consumer-discretionary and high-expectation stories not directly tied to AI. We may see a “two-speed” market: AI good, everything else uncertain.

Forward-Looking Catalysts:

• Hyperscaler Earnings: Any commentary from remaining tech giants will be crucial.
• Economic Data: Inflation and jobs data will still dictate the overall market mood.
• AI Conference News: Any product announcements from companies like AMD or Palantir could accelerate these moves.

My Predictions & Price Targets

Based on the synthesis above, I predict that markets will show a risk-on, tech-led rally at the open, with strength concentrated in AI-exposed names. The rally’s sustainability will depend on the ability of AI momentum to broaden out from semiconductors into software.

Specific Price Targets & Rationale:

Asset 1: Nvidia

• Bias: Bullish
• Current Price: $296.56
• Primary Target (PT1 – $305): The first level I expect it to reach today/intraday.
  • Rationale: This level represents a retracement to the previous week’s high and a key psychological round number.
• Secondary Target (PT2 – $315): A more ambitious target if the move gains momentum today.
  • Rationale: A break above $305 could trigger a short squeeze, targeting the next resistance level from mid-February.
• Key Level to Watch ($290): A hold above this level confirms the overnight strength and the Meta deal as a valid catalyst.

Asset 2: Broadcom

• Bias: Bullish
• Current Price: ~$332 (based on recent trading )
• Primary Target (PT1 – $345): The first level I expect it to reach today/intraday.
  • Rationale: This aligns with the 50-day moving average, which often acts as initial resistance.
• Secondary Target (PT2 – $360): A more ambitious target if the move gains momentum today.
  • Rationale: A push through $345 could see AVGO challenge its pre-selloff highs from early February, supported by its $73 billion AI backlog .
• Key Level to Watch ($330): The price must sustain above the $330 level, the site of Cathie Wood’s recent purchase, to validate the breakout .

Asset 3: Advanced Micro Devices

• Bias: Bullish
• Current Price: ~$173
• Primary Target (PT1 – $180): The first level I expect it to reach today/intraday.
  • Rationale: This is a key psychological level and a prior support-turned-resistance zone from last week.
• Secondary Target (PT2 – $188): A more ambitious target if the move gains momentum today.
  • Rationale: With the OpenAI and Oracle cloud deployments on the horizon , a strong day could propel AMD toward the top of its recent range.
• Key Level to Watch ($170): Holding above this level, which aligns with the 20-day exponential moving average, is crucial for the bullish thesis.

Asset 4: Palantir Technologies

• Bias: Bullish
• Current Price: $133.02
• Primary Target (PT1 – $150): The first level I expect it to reach today/intraday.
  • Rationale: Following the Mizuho upgrade to Outperform with a $195 target, the stock should gap up and test this immediate psychological resistance.
• Secondary Target (PT2 – $165): A more ambitious target if the move gains momentum today.
  • Rationale: This would mark a recovery of half of its recent year-to-date decline, signaling strong conviction from the buy-side.
• Key Level to Watch ($133.02): The stock should not close the gap below its previous close; holding this level is the first sign of strength.

Asset 5: CRH

• Bias: Neutral to Bullish (long-term value)
• Current Price: Based on its strong performance and positive outlook, CRH is a story of its own, unaffected by the AI noise.
• Key Level to Watch ($100): With its strong cash flow and $0.39 quarterly dividend , CRH is a watch for investors seeking non-tech exposure. A break above its recent trading range would signal broad institutional interest in its 2026 guidance .

What Could Go Wrong Today

Thesis Invalidation Levels:

• For NVDA: A break and sustained trade below $285 in the first hour of trading would invalidate the bullish thesis, suggesting the Meta news was “bought on the rumor, sold on the news.”
• For PLTR: A drop back below $130 would signal that the Mizuho upgrade is not enough to overcome valuation concerns, putting the stock back in the danger zone.
• For the Nasdaq: If the Nasdaq 100 futures give up their pre-market gains and turn negative, it would invalidate the entire risk-on, AI-led thesis.

Key Risk Factors: The primary risk is a sudden reversal in broader market sentiment driven by macroeconomic headlines (e.g., hotter-than-expected inflation data or hawkish Fed speak). The dramatic after-hours drop in Carvana is a reminder of how quickly sentiment can shift for overvalued stocks, a risk that applies to high-flying AI names as well .

Trading Considerations: Today calls for a disciplined approach. Given the pre-market gap-ups in names like PLTR, chasing at the open carries significant risk. Look for entries on pullbacks toward the primary target levels. If targets are hit quickly in the first hour, taking partial profits is a prudent strategy. A divergence where AI stocks rally but bond yields spike would be a warning sign for the broader market.

The Bottom Line for Today’s Open

Today’s pre-market action is a clear response to a powerful combination of company-specific catalysts (Nvidia-Meta deal, Palantir upgrade) and strategic investor positioning (Cathie Wood’s buys). The AI trade is not dead; it is rotating and broadening. The market is rewarding companies with tangible, scalable AI revenue stories.

Final Takeaway: The single most important insight for today is to differentiate between the AI infrastructure plays (NVDA, AVGO, AMD) and the AI software plays (PLTR) . Both can win, but they will trade on different timelines and metrics. Look for confirmation of strength in the first 30 minutes of trading before adding to positions. For those already holding these names, today may be an opportunity to tighten stops and let winners run.

What I’m Watching

I will be monitoring two things most closely: 1) The price action of NVDA relative to $290—if it can hold above this level on high volume, the rally has legs. 2) The performance of the IGV software ETF to see if the positive sentiment for Palantir spreads to the broader software sector, confirming the rotation is real and not just a one-off event.

Chart Source: TradingView
Disclaimer: This commentary represents my personal analysis and opinions. It is for informational purposes only and not financial advice. All investments involve risk, including loss of principal. Conduct your own research and consider your financial situation before making any investment decisions.

About the Author

Muhammad Faraz

Administrator

Faraz translates financial complexity into clarity. He delivers daily technical analysis on stocks, forex, commodities, and crypto, identifying key trends and trade setups through chart patterns and sentiment analysis. Simultaneously, he breaks down finance terms, personal finance strategies, and trading education, making sophisticated markets and money concepts accessible to all experience levels.

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