Stocks traded near record highs as investors awaited Nvidia Corp.’s upcoming earnings report, a pivotal moment for gauging the sustainability of the artificial intelligence (AI) boom that has fueled this year’s market rally.
As one of the most influential companies in the tech sector, Nvidia’s earnings are highly anticipated. With its shares contributing to over a third of the Nasdaq 100’s gains this year, Nvidia’s performance could signal the direction of the broader market. Citigroup’s Vishal Vivek noted that options trading suggests investors expect a 9% swing in either direction following the earnings release. Nvidia’s stock has already surged over 150% this year and a staggering 1,000% from its low in October 2022.
“Nvidia’s earnings report may have a more profound impact on the market than Jerome Powell’s recent Jackson Hole speech,” said Anthony Saglimbene, Chief Market Strategist at Ameriprise Financial. “It’s now Nvidia CEO Jensen Huang’s moment to influence market sentiment.”
Wolfe Research’s Chris Senyek highlighted that Nvidia’s results could set the tone ahead of the critical payrolls report on September 6. “We remain optimistic, but risks are tilted to the downside in the near term. Seasonally, we’re entering a weaker period of the year, especially in election years,” Senyek added.
In the broader market, the S&P 500 hovered around 5,620, while the Nasdaq 100 ticked up 0.2%. Nvidia saw a 1% increase, though small caps struggled with the Russell 2000 dipping 0.8%. U.S. Treasury yields edged up by two basis points to 3.84%, ahead of a $69 billion auction of two-year notes. Meanwhile, oil prices fell as technical indicators suggested that recent gains driven by potential Libyan supply disruptions were overextended.
Despite ongoing concerns about Federal Reserve policy, the economy, and the U.S. presidential race, one trend remains clear: AI spending is still driving market enthusiasm. Although recent worries about the returns on AI investments contributed to a brief tech selloff, the dip was quickly bought by investors confident in the AI growth narrative.
AI hardware and chip companies have been at the forefront of the Nasdaq 100’s recovery from its August lows, with Nvidia leading the charge, up approximately 30% during that period.
Analysts are broadly optimistic about Nvidia’s upcoming report, with expectations of more than 70% revenue growth for the current quarter. Some estimates are even higher. Nvidia’s results will not only be a key indicator of the company’s health but will also serve as a barometer for AI-related spending across the tech sector.
There have been rumors of delays in Nvidia’s new Blackwell chip lineup, but most analysts believe that demand for the company’s existing products will mitigate any potential impact. “Nvidia is expected to exceed consensus estimates and raise third-quarter guidance, although concerns about the Blackwell chip delay could temper expectations for fiscal 2025,” said Kunjan Sobhani of Bloomberg Intelligence.
Despite potential short-term volatility, the long-term AI growth story remains intact, according to UBS Global Wealth Management’s Mark Haefele. “Nvidia’s earnings this week, along with Apple’s upcoming iPhone launch, will be key catalysts. We continue to hold a positive outlook for quality AI beneficiaries in the semiconductor and software industries,” Haefele remarked.
The focus on Nvidia’s earnings highlights how one company’s performance can significantly influence the broader market. According to Ryan Grabinski of Strategas, “Nvidia’s earnings will be a major market catalyst. A miss could have widespread implications, given its substantial contribution to earnings estimates.”
As the earnings season winds down, Bloomberg Intelligence notes that mentions of AI in second-quarter earnings calls have decreased, likely because Nvidia and Salesforce Inc. have yet to report.
“Recession talk among S&P 500 company management has increased slightly for the first time since the second quarter of 2022,” said BI strategists led by Gina Martin Adams. “However, macroeconomic concerns have largely taken a backseat to AI and consumer spending.” On the economic front, mixed signals emerged as consumer confidence reached a six-month high in August, although optimism about the labor market weakened.
Jonas Goltermann of Capital Economics suggests that while the S&P 500 is nearing its all-time high following Powell’s dovish remarks, underlying risks remain. “If the U.S. economy avoids a hard landing and AI enthusiasm continues, we forecast the S&P 500 could reach 6,000 by year-end,” Goltermann said.
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