Weekly Market Update: 28th Aug
28/08/2026
Lucy Smith discusses the Nvidia’s latest quarterly results, the new UK price cap on energy bills and the escalation in the US / Canada trade war.
Transcript
Good morning and welcome to the Killik & Co Market Update.
This week, we had earnings from chip giant Nvidia, which reported better-than-expected results for the second quarter. Nvidia is currently the largest company in the world and a global leader in GPUs, the chips that power many of today’s data centres and AI applications.
This chart highlights some of the key figures from Nvidia’s latest results. One of the biggest takeaways is the continued strength of revenue growth, which increased by 106% year-on-year, more than doubling from the same period last year.
Operating expenses, which reflect the day-to-day costs of running the business, have also increased. This is partly due to soaring memory costs as the global shortage continues.
However, despite these higher costs, operating income, the profit generated after operating expenses, continues to grow strongly, increasing by 124% year-on-year.
Investors responded positively, with the shares opening around 6% higher following the results.
That said, Nvidia’s share price has been relatively weak over the past year. Ahead of the results, the stock was trading around the levels seen last November. Shares had also come under pressure in the week leading up to the announcement, as investors questioned whether the company’s increasing capital expenditure would ultimately be justified by future revenues.
This relative weakness becomes even clearer when we compare Nvidia with some of its peers. This chart shows Nvidia’s returns in light green against the iShares Semiconductor ETF in dark green. The ETF includes Nvidia, but also other major semiconductor companies such as Micron, AMD and Broadcom. Over the past year, the ETF has roughly doubled, while Nvidia has lagged behind.
However, when we extend the timeframe to five years, the picture looks very different. Nvidia is the clear outperformer, having experienced exponential growth as the company has become one of the key beneficiaries of the AI boom. Its latest results reinforce the view that Nvidia remains one of the major winners from this long-term trend.
Nvidia is a Killik-covered stock, so do get in touch if you’d like to discuss the company in more detail.
Turning to the UK, Ofgem announced this week that the energy price cap will increase by 4% from October, taking it to its highest level in three years. This will add further pressure to UK household finances and creates another challenge for the government as it looks to ease cost-of-living pressures.
This chart shows the price cap over the past five years. You can see the sharp spike in 2022 following Russia’s invasion of Ukraine, before prices began to come down from the middle of 2023.
You may notice that the latest price cap appears lower than some previous levels. This is partly because Ofgem has changed its methodology and now assumes that households use less energy. So, under the new methodology, the headline cap appears lower than it otherwise would have been.
A major factor behind the latest increase is the rise in wholesale gas prices. This chart shows the one-year price of UK natural gas. You can see the spike around the Iran conflict, with prices remaining elevated as the geopolitical tensions continue and the conflict has not yet been resolved.
The futures market is also pointing to higher gas prices through the rest of 2026. You can see the increase in natural gas priced through the rest on the year on this chart, before starting to dip in 2027. That has led some analysts in the energy market to suggest that further increases to the price cap could be possible in the new year.
For the government, this presents another challenge as it tries to keep cost-of-living pressures under control. The UK is a net importer of energy, including natural gas, so these events are also a reminder of how vulnerable the country is to movements in global energy markets.
In the longer term, this could encourage governments to place a greater focus on domestic energy production and renewable generation, helping to improve the UK’s energy resilience when similar shocks occur in the future. With renewables now account for just over 50% of the UK’s electricity generation.
One company that stands to benefit from the long-term growth in renewable energy is SSE. SSE’s renewables business is the largest generator of electricity from renewable sources in the UK and Ireland.
As you can see from the chart, which shows the share price over the past three years, the shares have performed strongly, rising around 35% over the past year.
In its latest trading statement in July, SSE said its renewables business had performed well, supported by favourable weather conditions and continued expansion of its generation capacity, with renewable generation output 31% higher year-on-year.
SSE is a Killik-covered stock, so please do get in touch if you’d like to discuss the company in more detail.
Finally, turning to North America, Canadian Prime Minister and former Bank of England Governor Mark Carney has escalated the country’s trade dispute with the US, announcing dollar-for-dollar retaliatory tariffs on American goods. So far, markets have been relatively unfazed by the escalation, perhaps because investors have been focused on other issues dominating the headlines, including US debt levels and Treasury markets, which Rachel covered in last week’s video.
The retaliatory tariffs announced by Canada include 50% tariffs on steel and aluminium products, 50% on a range of goods including furniture and clothing, 25% on appliances, and 15% on machinery.
There are industries on both sides of the border that rely on trade with the other country. So, if these tariffs remain in place for an extended period, they could begin to have a more meaningful impact on businesses and consumers in both economies. With one potential consequence being higher inflation.
The latest US inflation data, released this week, showed inflation at 3.4%, which remains above the 2% target. The escalation in the trade war will not have been reflected in this latest inflation figure, given the timing of the data. However, if the tariffs remain in place for longer, they could add to costs for businesses and consumers and create further inflationary pressure.
Looking forward to the week ahead we have results from Broadcom on Wednesday.
That’s all from us, have a great bank holiday weekend.
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