The S&P 500 achieved yet another record closing on Thursday as market participants analyzed Nvidia’s earnings results and outlook. Investors predominantly interpreted the figures as validating the AI surge. The broad market index concluded the trading session with a gain of 0.32%, reaching a level of 6,501.86 after surpassing the significant threshold of 6,500 during intraday trading, marking a new all-time high. The Nasdaq Composite concluded the trading session with an increase of 0.53%, reaching 21,705.16. Meanwhile, the Dow Jones Industrial Average experienced a rise of 71.67 points, equivalent to 0.16%, finishing at 45,636.90, marking yet another record high.
Nvidia, accounting for approximately 8% of the S&P 500 according to FactSet, announced second-quarter results that surpassed Wall Street’s expectations, showcasing a remarkable revenue growth of 56%. Initial concerns emerged, notably that revenue for the data center business fell slightly short of estimates. Second, the company projected overall revenue for this quarter at $54 billion, marginally exceeding the expectations of $53.1 billion from analysts.
Aside from a brief uptick at the opening, shares faced sustained pressure throughout the trading session, ultimately concluding with a decline of 0.8%. Numerous traders and analysts have observed that the revenue guidance does not incorporate any sales of H20 chips to China. Should an agreement be reached between China and the Trump administration regarding those sales, revenue for this quarter may significantly exceed expectations. “They didn’t include China in their guide, and some people were hoping there were some China sales in there, maybe a little firmer stance that China sales could get going,” Ben Reitzes, head of technology research at Melius, stated on CNBC’s “Squawk Box.” “The core growth outside of China was indeed robust,” he added. “There should be more significant growth in the fourth quarter, so I believe we’re all systems go.”
A number of semiconductor analysts have adopted a more optimistic stance regarding Nvidia, subsequently increasing their price targets for the stock. JPMorgan, Citi, and Bernstein are among the Wall Street firms that now perceive an even more significant potential for the chipmaker. Other chipmakers that initially experienced declines have started to show signs of recovery. Broadcom closed 2.8% higher, while Micron Technology added 3.6%, indicating that a significant number of investors perceive Nvidia’s results as a catalyst for the ongoing AI trade. Meanwhile, shares of AI play Snowflake increased by 20% following the release of its second-quarter results, which exceeded expectations.
The market is emerging from a successful session on Wednesday, with the S&P 500 achieving a record in expectation of robust Nvidia results. Investors appear to be dismissing concerns regarding the Federal Reserve’s autonomy in light of recent developments involving the Trump administration. Earlier this week, President Donald Trump informed Fed Board Governor Lisa Cook of her termination, a decision that Cook has formally contested by filing a lawsuit on Thursday. A hearing has been scheduled by a judge for Friday. In a display of supportive sentiment, the Commerce Department announced on Thursday that gross domestic product expanded at an annualized rate of 3.3% in the second quarter. That was an improvement over the initial estimate of 3.0% and the forecast of 3.1%. The upcoming challenge for the market will be the inflation report released on Friday. Economists surveyed by Dow Jones anticipate that the personal consumption expenditures price index for July will indicate an increase of 0.2% month-over-month and 2.6% year-over-year.