Understanding the Nasdaq’s September Decline and Its Impact on Nvidia and Micron

Key Points

• The Nasdaq has experienced an average return of -1% in September since its inception in 1971, making it the only month with a consistently negative long-term average.

• Approximately 52% of the time, the Nasdaq finishes higher in September, but the magnitude of declines during this month often outweighs the gains.

• Nvidia recently reported record earnings before September, while Micron is set to release fiscal fourth-quarter earnings on September 30.

September is noted for its poor performance in equity markets, prompting portfolio managers to adjust their holdings. This seasonal weakness is particularly critical for AI stocks like Nvidia and Micron, as managers typically lock in profits from prior gains, which could lead to heightened volatility in the Nasdaq.

Despite Nvidia’s strong earnings report, the seasonal backdrop may encourage profit-taking, while Micron’s upcoming earnings will be scrutinized closely, especially after Nvidia’s performance has set a new tone for the sector. Investors are advised to be cautious and clearly distinguish between short-term fluctuations and long-term trends in the AI infrastructure market.