Nvidia’s stronger-than-expected growth forecast sent chip and technology shares higher Thursday, helping the Nasdaq surge 1.57% and lifting the S&P 500 even as much of the broader market remained under pressure from interest rates, geopolitical tensions and trade concerns.
By yourNEWS Media Newsroom
Wall Street’s technology rally regained momentum Thursday after Nvidia delivered a revenue outlook that exceeded already elevated expectations, sending semiconductor and software shares higher and propelling the Nasdaq Composite well ahead of the broader market.
Preliminary closing data showed the Nasdaq Composite climbing 411.16 points, or 1.57%, to 26,540.78. The S&P 500 advanced 55.03 points, or 0.72%, to 7,730.73, while the Dow Jones Industrial Average added 100.33 points, or 0.19%, to finish at 53,564.21.
Nvidia was a major force behind the gains after its forecast reinforced expectations that spending on artificial intelligence infrastructure remains strong. The chipmaker’s shares jumped as investors assessed continued demand from companies building the computing systems needed to develop and operate AI technology.
“Nvidia’s results show that the AI boom is not running out of demand … while delivering that growth is becoming more expensive and capital-intensive,” said Lale Akoner, global market strategist at eToro.
Morgan Stanley said Thursday that Nvidia’s outlook points to revenue growth of 70% next year, substantially above the investment bank’s own estimate of 52%. The broader consensus estimate is closer to 40%.
“We would expect Nvidia to continue to knock down barriers to higher growth,” analyst Joseph Moore said in the Morgan Stanley note.
The outlook provided additional support for investors who have continued to favor companies positioned at the center of the AI infrastructure expansion. Nvidia has cautioned, however, that shortages of memory components could restrict how quickly the industry is able to grow despite continued demand.
The enthusiasm extended across U.S. semiconductor shares, driving strong gains in the semiconductor index.
Technology was the clear leader within the S&P 500. The S&P 500 Information Technology sector posted the strongest performance among the benchmark index’s 11 sectors even as most of the remaining sectors traded lower.
That divergence underscored the extent to which Thursday’s advance was concentrated among technology companies rather than reflecting a broad-based rally across Wall Street.
“While Nvidia’s earnings beat and strong guidance restarted the party, it’s apparent that not all sectors of the market were invited,” said Charlie Ripley, senior investment strategist at Allianz Investment Management.
“Market headwinds continue to be a factor as higher interest rates, geopolitical tensions and global trade, among other things, are playing a role in the weakness seen across other sectors.”
Software companies also participated in the technology advance following upbeat corporate reports from Salesforce and CrowdStrike.
Salesforce shares surged after the company increased its annual revenue and profit forecasts and introduced a new plug-in integrated with Anthropic’s Claude artificial intelligence models.
The move made Salesforce the largest positive contributor to the Dow and put the stock on course for its strongest single-day gain in six years.
CrowdStrike also climbed after the cybersecurity software company increased its full-year revenue forecast and reported second-quarter earnings that exceeded estimates.
Those results helped ease investor concerns that increasingly capable artificial intelligence systems could disrupt established software businesses.
The response to Salesforce and CrowdStrike increased demand for software stocks that had previously lagged the semiconductor companies viewed as the most direct beneficiaries of the AI investment boom. The move narrowed some of the performance gap between the two technology groups.
Other software companies joined the advance, including ServiceNow and Palo Alto Networks.
Not all individual stocks benefited from Thursday’s market strength.
Moderna declined after announcing a $2 billion convertible bond offering.
HP shares also fell after the company reported declines in third-quarter shipments and margins within its personal computer business.
Outside technology, energy markets reflected renewed geopolitical uncertainty.
Brent crude rose more than $2 per barrel Thursday following a Wall Street Journal report that President Donald Trump is not interested in returning to the terms of a memorandum of understanding reached with Iran in June.
The increase in oil prices added another consideration for investors already weighing inflation, trade policy, geopolitical tensions and elevated interest rates.
With Nvidia’s earnings report completed, attention on Wall Street is now shifting toward monetary policy and Federal Reserve Chair Kevin Warsh’s first address at Jackson Hole on Friday.
Investors will be watching for indications of how the Federal Reserve is interpreting the latest inflation figures as well as developments surrounding the U.S. Treasury’s efforts to bring yields under control.
“A common theme from Warsh has been his focus on the supply side of the economy and we expect that to remain the focus,” said Christopher Hodge, chief U.S. economist for Natixis.
“I highly doubt that Warsh will be too declarative in his assessments of what’s to come, but it would not be surprising if he expressed some skepticism about previous policy assumptions and generally struck an anti-doctrinaire approach,” Hodge added.
The monetary policy outlook became less certain Wednesday after the Personal Consumption Expenditures inflation reading came in hotter than economists had expected.
That report tempered some of the optimism that had followed a more favorable consumer inflation reading earlier in the month.
Two Federal Reserve officials added to concerns about persistent inflation Thursday by reiterating their support for raising interest rates if necessary to bring price pressures under control.
Labor market data, meanwhile, continued to indicate stability.
The number of Americans filing first-time applications for unemployment benefits declined for a second consecutive week. The overall number of people receiving benefits also fell to its lowest level in a month.
Those figures provided additional evidence of resilience in the labor market as policymakers and investors weigh whether inflation remains strong enough to require additional monetary tightening.
Thursday’s trading ultimately reflected two competing forces across financial markets.
Nvidia’s forecast strengthened expectations that the artificial intelligence investment cycle remains capable of generating rapid growth, driving another strong move in technology and semiconductor shares. At the same time, weakness across much of the rest of the market showed that investors remain cautious about higher borrowing costs, inflation, global trade tensions and geopolitical risks.
The next test for that outlook will come Friday when Warsh addresses the Jackson Hole gathering, with markets looking for clues about how the Federal Reserve intends to balance continued economic resilience against renewed concerns over inflation.
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