Nvidia’s Strong Earnings Fuel AI Optimism, Lifting Wall Street

Wall Street

On Thursday, most U.S. stocks advanced, driven by Nvidia’s (NASDAQ:NVDA) impressive earnings report, which has amplified enthusiasm for the profit potential of artificial intelligence.

The S&P 500 rose by 0.4% in early trading, poised to surpass its record set earlier this week. Technology stocks led the charge, with the Nasdaq composite up 1%, also aiming for a new all-time high as of 9:38 a.m. Eastern time. The Dow Jones Industrial Average, which is less tech-focused, lagged, falling 129 points, or 0.3%.

Nvidia’s stock surged 9.2% following its stellar profit report released on Wednesday. The company’s revenue skyrocketed 262% in the latest quarter compared to a year ago, with profits soaring an astounding 629%. Nvidia’s chips, crucial for training AI systems, are in high demand.

Nvidia also announced an increased dividend, with CEO Jensen Huang proclaiming, “the next industrial revolution has begun.”

There are concerns that Wall Street’s AI frenzy may have created a bubble with overly inflated prices and high expectations. However, Nvidia’s continued robust growth has reassured investors, boosting other stocks.

AMD gained 3.7%, and other chip companies followed suit. Super Micro Computer, a provider of AI server and storage systems, saw its stock jump 10.6%.

News Corp. rose 1.3% after announcing a deal to supply content from The Wall Street Journal, New York Post, and other outlets to OpenAI.

These gains offset a 9.8% drop in VF Corp., the parent company of The North Face, Vans, and Timberland, which reported a quarterly loss and weaker-than-expected revenue.

In the bond market, Treasury yields remained steady following a report indicating the U.S. job market is holding up despite high interest rates. Fewer workers applied for unemployment benefits last week than expected, suggesting layoffs are low.

The yield on the 10-year Treasury dipped to 4.42% from 4.43% late Wednesday, while the two-year yield, more closely tied to Federal Reserve actions, inched up to 4.88% from 4.87%.

The Federal Reserve is attempting to balance slowing the economy enough to control inflation without triggering a recession. Optimism is growing on Wall Street that this delicate balance can be achieved, with some even hopeful that the economy may avoid a slowdown altogether.

Internationally, stock markets were mixed. Japan’s Nikkei 225 rose 1.3%, bolstered by semiconductor-related companies following Nvidia’s strong report. Conversely, indexes in Hong Kong and Shanghai fell 1.7% and 1.3%, respectively, amid doubts about the effectiveness of new policies to support China’s struggling property sector.

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About the author: Stephanie Bedard-Chateauneuf has over six years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, health stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.