Stocks to Watch in September

Stocks rebounded in the final weeks of August, putting the S&P 500 just below its all-time high heading into September. But a lot has changed under the surface since July.

The Magnificent Seven stocks that once dominated the market have yet to fully recover from recent sell-offs. The year’s most popular trade—a long bet on big tech stocks—has faltered as investors have warmed up to dividend payers and other rate-sensitive stocks in anticipation of interest rate cuts by the Federal Reserve.

With the Fed all but guaranteed to lower rates at its September meeting, the big unknowns hanging over markets in September are: How much will rate cuts be? And can the AI trade regain its footing?

Below, we look at five stocks that could either lead market trends or see big price moves in September.

Nvidia

Nvidia (NVDA) on Wednesday delivered another solid quarterly earnings report, and yet the results didn’t quite live up to investors’ lofty expectations.

The market’s tepid reception of Nvidia’s earnings reflected simmering unease about tech’s AI binge and Nvidia’s meteoric ascent. Microsoft (MSFT), Alphabet (GOOG; GOOGL), Amazon (AMZN), and Meta (META) spent a cumulative $58.5 billion on infrastructure in the second quarter, with much of it going toward AI data centers. The price tag spooked Wall Street and led some to question the wisdom of Big Tech’s investment. Nvidia, despite being a beneficiary of all that capital spending, has been tripped up by these concerns in recent months.

The company is also now, after more than a year and a half into its monster rally, being held to a much higher standard than the average company. On Wednesday, the company forecast current-quarter revenue of $32.5 billion, about 2% ahead of the Wall Street consensus. That paled in comparison to prior quarters when the company repeatedly issued forecasts that exceeded Wall Street’s estimates by double-digit percentages. 

Nvidia stock has acted as a proxy for the market’s AI enthusiasm for more than a year. How Nvidia performs in September will likely depend on whether doubts about AI’s payoff are persistent or transitory.

Apple

Apple (AAPL) is widely expected to launch its new AI-enabled iPhone model, the iPhone 16, at an event at its Cupertino, California headquarters on September 9. 

Apple had a rough start to the year, with its stock slipping about 11% in the first quarter as Wall Street worried about sluggish iPhone sales and uncertainty about the company’s AI strategy. Shares have more than rebounded since the company unveiled Apple Intelligence, its custom artificial intelligence system, in June.

Apple Intelligence is expected to fuel a massive upgrade cycle in which existing iPhone owners trade in their old devices for newer, often-pricier models. Wedbush analysts have estimated that 300 million existing iPhone owners haven’t upgraded in more than 4 years, setting the company up to potentially sell upwards of 240 million iPhones in its 2025 fiscal year.

September’s product launch will be Apple’s last big opportunity to gin up excitement about Apple Intelligence on both Wall Street and Main Street before the new model hits shelves before the all-important holiday shopping season. 

Alphabet

Google parent Alphabet (GOOG; GOOGL) faces its second antitrust case this year in September as it goes head-to-head with the Department of Justice (DOJ). 

The DOJ and eight states filed a suit in January that accused Google of monopolizing the digital advertising technology market. Among the DOJ’s proposed remedies is the forced divestiture of Google’s ad tech stack.

The trial, presided over by U.S. District Judge Leonie Brinkema, will begin on September 9. While Brinkema won’t rule on the case before the end of September, the trial could bring to light some unflattering revelations and loom over the stock.

Alphabet investors will be hoping for a better outcome in this case than the last. Federal judge Amit Mehta in early August ruled that the company illegally monopolized the online search market. Mehta has scheduled a hearing for September 6 to consider possible remedies, the most dramatic of which would be to break up Google. Alphabet has vowed to appeal the ruling.

Broadcom

Semiconductor giant Broadcom (AVGO) is scheduled to report quarterly earnings after markets close on Thursday, September 5, and the report could test the stock’s substantial year-to-date gains. 

Broadcom shares have risen 46% so far this year, compared with 24% for the PHLX Semiconductor Index (SOX). The stock has gotten a boost from enthusiasm for AI, though not nearly as big a boost as Nvidia, which has gained 141% this year. 

According to JPMorgan analysts, the chip designer has recently added two major AI chip customers to a list of clients that already includes Google, Meta, and TikTok-owner ByteDance. And reports have suggested that OpenAI, the Microsoft-backed startup behind Chat-GPT, could be one of those clients. 

Broadcom executives have estimated their AI semiconductor opportunity to total more than $150 billion over the next five years “and we believe the OpenAI and customer #5 ASIC wins would be strong contributors to this opportunity,” wrote the analysts.

Investors will likely be looking for management to confirm reports about new customers, which could support bullish forecasts even as Wall Street becomes more demanding of AI winners.

Kroger

The fate of America’s largest grocery store merger could be decided in a federal court in September. 

Kroger (KR), which announced its $25 billion merger with rival Albertsons (ACI) in October 2022, is in the midst of a three-week federal hearing in Portland, Oregon, where it is fighting an antitrust lawsuit filed by the Federal Trade Commission (FTC) and several states. 

The FTC’s lawsuit alleges the merger would harm competition and lead to higher grocery prices. Kroger and Albertsons maintain that the deal will lower prices and give the grocers a chance to compete with larger rivals like Walmart (WMT), Costco (COST), and Amazon (AMZN). 

The FTC has asked the Portland court to impose a temporary injunction that would delay the deal and allow an FTC administrative judge to hear the case in separate proceedings tentatively scheduled for October 1.

Kroger’s attorneys have insisted that, if the court grants the FTC its injunction, financing agreements will expire, possibly forcing Kroger and Albertsons to call off the merger. 

Kroger sued the FTC in mid-August, alleging the regulator’s use of in-house tribunals—the kind that would hear the case in October—is unconstitutional.