Nvidia’s Impressive Earnings Boost AI Optimism, Fueling Wall Street Rally

Wall Street

Most advanced Thursday, boosted by Nvidia’s (NASDAQ:NVDA) impressive earnings report, which has increased enthusiasm for the potential of artificial intelligence.

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

Nvidia’s stock surged 9.2% following its stellar released on Wednesday. The company’s revenue skyrocketed 262% in the latest quarter compared to a year ago, with profits soaring an extraordinary 629%. Nvidia’s chips, essential 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 worries that Wall Street’s AI frenzy may have created a bubble with over-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. increased 1.3% after announcing a deal to provide 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 stayed constant 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 that 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 trying to balance slowing the economy enough to control inflation without triggering a recession. Optimism is growing on Wall Street that this sensitive 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 increased 1.3%, supported by semiconductor-related companies following Nvidia’s strong report. On the other hand, indexes in Hong Kong and Shanghai decreased 1.7% and 1.3%, respectively, amidst doubts about the effectiveness of new policies to support China’s struggling property sector.