US equities opened higher on Thursday, with the Nasdaq Composite leading gains, as Nvidia's robust quarterly results and forward guidance reignited investor enthusiasm for artificial intelligence-related investments. The chipmaker's forecast underscored sustained demand for AI computing infrastructure, lifting semiconductor and software stocks in early trading.
The Nasdaq Composite advanced 0.75%, while the S&P 500 edged up 0.24%. The Dow Jones Industrial Average slipped 0.04%, reflecting a mixed session as investors weighed corporate earnings and awaited key central bank commentary.
Nvidia's outlook boosts tech sector
Nvidia shares jumped 5.59% following its earnings release, which showed revenue more than doubling in the fiscal second quarter. The company projected 70% revenue growth for fiscal 2028, according to LSEG estimates, up from the 44% previously expected by analysts. However, Nvidia cautioned that shortages of memory components could temper the pace of industry growth, a warning that has implications for memory suppliers.
The positive sentiment spilled over to other chipmakers. Micron Technology and Marvell Technology each gained about 1%, while SanDisk rose more than 2% amid expectations of tighter NAND supply. The broader technology sector also advanced, with software names particularly strong.
Software stocks rally on strong earnings
Salesforce surged 15% after raising its annual revenue and profit forecasts and unveiling a new plug-in integrated with Anthropic's Claude AI models. CrowdStrike also climbed 15% after lifting its annual revenue outlook and beating second-quarter earnings expectations. Other software companies followed suit, with ServiceNow up 6% and Palo Alto Networks advancing 9%.
The rally in software stocks helped narrow the performance gap between traditional software firms and semiconductor companies, which have been primary beneficiaries of AI investment. Strong results from Salesforce and CrowdStrike eased concerns that advanced AI tools could disrupt legacy software business models.
Nvidia earnings shift focus to AI growth sustainability
Nvidia's results provided a fresh boost to the AI trade, which had recently seen the stock decline even on earnings beats. The company's guidance suggests continued robust demand, but analysts remain cautious about the sustainability of AI capital spending and the financing structures behind some large AI projects. These factors remain key risks for technology equities.
Thursday's gains followed a largely flat session on Wednesday, as investors digested a mix of corporate news. Moderna fell 4.9% after announcing a $2 billion convertible bond offering, while HP dropped 8.6% on weaker PC shipments and margins in its fiscal third quarter. Dollar General rose 5.6% after raising its annual comparable-sales forecast.
Markets await Warsh and economic data
With Nvidia's earnings now in the rearview mirror, attention shifts to the Federal Reserve and macroeconomic indicators. Federal Reserve Chair Kevin Warsh is scheduled to deliver his first address at the Jackson Hole symposium on Friday, with investors seeking clues on the central bank's inflation and interest rate stance, as well as its views on recent Treasury debt management efforts.
The July Personal Consumption Expenditures price index, released Wednesday, came in slightly hotter than expected, complicating the monetary policy outlook. Kansas City Fed President Jeffrey Schmid has indicated that current interest rates are not restrictive and expressed support for further rate increases to bring inflation closer to target.
On the labor front, initial jobless claims fell to 203,000 for the week ended August 22, below the 208,000 economists had forecast, signaling continued resilience in the job market.
Investors will also be monitoring AI cloud optimism and Nvidia's AI forecast impact on other tech names, as well as memory supply dynamics and Nvidia's growth projections.
This article is for informational purposes only and does not constitute financial advice.
