U.S. equities closed higher on Thursday, with the Nasdaq Composite leading gains as Nvidia's robust revenue outlook ignited a broad rally in technology and semiconductor shares. The Nasdaq climbed 1.57%, or 411 points, to 26,540.78, while the S&P 500 advanced 0.72% to 7,730.73. The Dow Jones Industrial Average added 0.19% to close at 53,564.21.
Nvidia shares surged nearly 9% after the chipmaker beat analyst expectations and issued a strong revenue forecast. The company's fiscal second-quarter revenue more than doubled year over year, and analysts now project 70% revenue growth for fiscal 2028, up from a prior consensus of 44%. This outlook reinforced confidence that demand for AI computing remains robust, although Nvidia cautioned that memory component shortages could constrain industry growth.
The upbeat sentiment spilled over into the broader semiconductor space. Broadcom rose 3%, while Intel and SK Hynix gained 3% and 1%, respectively. The VanEck Semiconductor ETF advanced 2%, and the S&P 500 Information Technology sector was the strongest performer among the index's 11 major groups.
Software and cybersecurity stocks also joined the rally, easing concerns that AI might disrupt traditional software businesses. Salesforce jumped 23% after reporting second-quarter revenue above expectations and raising its annual guidance. The company also introduced a plug-in integrated with Anthropic's Claude AI models. Cybersecurity names posted even sharper gains: Okta soared 29%, CrowdStrike climbed 20%, and Palo Alto Networks added 13%, all after exceeding estimates and lifting outlooks. ServiceNow and Adobe also moved higher.
This strong performance from software companies helped narrow the gap between software and semiconductor stocks, which have been the primary beneficiaries of the AI investment cycle. However, market gains were not uniform. Moderna fell after announcing a $2 billion convertible bond sale, and HP declined on weaker PC shipments and margins.
With Nvidia's earnings now in the rearview mirror, investor attention shifted to monetary policy. Federal Reserve Chair Kevin Warsh is scheduled to deliver his first Jackson Hole address on Friday, and markets are looking for clues on the central bank's approach to inflation and interest rates. The outlook has become more complicated after Wednesday's Personal Consumption Expenditures reading came in hotter than expected. Two Fed officials reiterated inflation concerns on Thursday and maintained support for higher rates.
Meanwhile, U.S. jobless claims fell for a second consecutive week, reaching their lowest level in a month, signaling continued labor market stability. Investors will weigh Warsh's comments alongside the latest inflation and employment data as they assess the path for interest rates and its potential impact on equities.
For more context on Nvidia's valuation and market dynamics, see Michael Burry's caution on Nvidia and why memory stocks are sliding. Also, stocks that could benefit from the PCE surprise and how Nvidia's AWS deal reshapes chip rivalry.
This article is for informational purposes only and does not constitute financial advice.
