Nvidia, a massive player in the chip industry, has outdone itself by exceeding high earnings expectations. They've also sparked a surge in the world of artificial intelligence by reaching what they call a "tipping point."
These results have pushed their stocks to all-time peaks in their home country, Japan and Europe. It looks like Wall Street is getting ready to jump on the bandwagon.
Nvidia forecast ignites global chip stock rally
Shares for the company shot up 12% before the market even opened, following their prediction of tripling their quarterly revenue. This forecast far exceeds estimates, causing a worldwide surge in chip stock prices.
Nvidia has just revealed a forecast for an astonishing uptick in its first-quarter revenue: a 233% increase. It surpasses Wall Street's already high prediction of 208% growth. Nvidia's stock has tripled over the last year after reaching a revenue of about $22 billion in the past quarter.
With the latest surge in stock prices, it's set to add another $130 billion to its market value. It could see Nvidia retaking its spot as the third most valuable company in the U.S. by the close of Thursday's trading.
Emphasizing the breakthrough in the technology sector, Nvidia's Chief Executive, Jensen Huang, boldly stated that accelerated computing and generative AI have reached a pivotal tipping point. The statement came to light after Wednesday's results were released from their side, where he further highlighted that the firm is grappling to meet the overwhelming demand.
As expected, the surge has pushed Nasdaq futures up by 2% ahead of today's traded session. Also, following a gloomy performance on Wednesday, the S&P500 is now up over 1%.
The AI chip craze set off a global rally, pushing Japan's Nikkei to an unprecedented peak. This surge was so significant that it outshone the highs of Japan's property bubble in 1990.
Europe's STOXX 600 also saw a significant rise, soaring close to 1% and breaking its previous record in January 2022. The region's chipmakers largely drove this surge. Not only STOXX 600 but also Germany's DAX, France's CAC 40, and Amsterdam's AEX indexes reached new heights.
Despite the ongoing concern about China's economic health, the nation's stock market recovery continued. It's showing encouraging signs, with positive growth for the fourth straight session after the holidays.
Another blockbuster quarter from Nvidia raises the question of how long its soaring performance will last
Jacob Bourne
Nvidia earnings boost investor confidence
Nvidia's excellent earnings report comes at a time when many investors are hunting for ways to grow their money in these uncertain economic times. Nvidia thinks it will keep growing its revenue next quarter, making investors feel more confident.
Even with AI stocks performing well, some investors still have worries about possible ups and downs in the market and the overall economy. Wedbush Securities analyst Dan Ives comments on the current volatile environment for the stock market, attributing it to recent inflation data and geopolitical tensions.
The crypto market rebounded in the overnight session, supported by a return of optimism in stocks after a cheering Nvidia report
Alex Kuptsikevich
Fed's caution against early rate cuts
While the excitement of AI is taking the world by storm and boosting stock values, it contrasts with a gloomier atmosphere in interest rate markets. Here, the Federal Reserve and other central banks seem to be hitting the brakes on rate cuts in the year's first half.
Based on the latest meeting minutes released this Wednesday, most Fed policymakers are concerned. They're worried about the perils of decreasing interest rates too prematurely. There's a lot of uncertainty about how long these rates should stay as they are currently.
Expectations for a full-year rate reduction by the Federal Reserve have now been dialed down to less than 90 basis points. As per the futures markets' anticipations, the first decrement of a quarter-point is not entirely supposed to happen until July.
However, the dollar index surprisingly plunged to its lowest point in nearly three weeks.
This drop was primarily led by the euro accelerating upwards after the eurozone posted unexpectedly positive business activity numbers for early February.