Nvidia's (NVDA) stock continues to rally ahead of its highly anticipated quarterly earnings report on August 28th. To discuss the potential impact of the semiconductor giant's results on the broader tech sector (XLK), Bernstein Internet Equity Research Analyst Mark Shmulik joins Morning Brief.

Shmulik notes that when it comes to the AI trade, tech giants have made it clear that "the risk of underinvesting is much higher than the risk of overinvesting." He believes that "so long as that momentum continues," the entire tech sector stands to benefit.

Regarding tech valuations, Shmulik observes they have cooled and "are not demanding." However, he emphasizes that companies must "deliver on the core business ahead of you today" to fund their ongoing AI investments. Notably, with companies like Alphabet's Google (GOOG, GOOGL) beginning to see returns on their AI investments, Shmulik points out that "it's no longer talk of a theoretical, it's actually showing up in the numbers."

When it comes to investment opportunities in the AI space, Shmulik highlights Meta (META) as "one of the cleaner names" for those looking to participate in the AI trade.

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This post was written by Angel Smith