Nvidia, whose chips are helping power the AI boom, reported another stellar quarter of profit growth that exceeded analyst expectations. It also provided a forecast for current quarter revenue that once again exceeded Wall Street expectations.But such great performance has become so typical of Nvidia that it failed to impress. The stock fell 4.6%.
“Our customers are rushing to invest in AI compute – the factories that power the industrial AI revolution and their future growth,” said Nvidia CEO Jensen Huang.
Nevertheless, concerns are mounting that these customers will eventually curtail their spending on Nvidia’s chips and other AI investments, amid doubts about whether they can recoup all their billions of dollars through future productivity gains.
Because Nvidia is the largest stock in the US market by value, it has more influence on the price of the S&P 500 than any other stock. The index alone was responsible for more than two-thirds of the S&P 500’s decline, and it would have been higher if neither the index nor rival Broadcom had been members. On Wall Street’s winning side Thursday was Salesforce, which rose 3.1% after also reporting stronger earnings for its latest quarter than analysts expected.
It’s a return to gains for the stock, which is still down more than 25% for the year to date. It is under pressure over concerns that AI-powered competitors could undermine its business.
Salesforce itself uses AI in its platform that helps customers manage relationships with their own customers. It also made several announcements that typically boost a stock’s price: It will send up to $50 billion to shareholders through share buybacks, and it increased its dividend.
“Agentic AI is a tailwind for our company,” said CEO Marc Benioff.
Salesforce also forecast revenue growth of 10% to 11% this fiscal year. The midpoint of that range was slightly below analysts’ expectations.
Stocks of companies in sectors such as trucking logistics and financial services have also fallen victim to sudden and aggressive attacks from investors who fear their companies will be succumbed to AI or even become obsolete. The sharpest swings have hit software companies, and a widely followed ETF tracking the sector rose 2.2% on Thursday, pushing its year-to-date loss below 22%.
Elsewhere on Wall Street, shares of Warner Bros fell. Discovery fell 0.3% after the entertainment giant reported a $252 million loss for the fourth quarter. That didn’t seem to bother investors, who are likely more interested in which takeover offer – Netfix or Paramount Skydance – the company and its shareholders ultimately accept.
One of the strongest moves in financial markets was in oil, where prices fluctuated as the United States and Iran held indirect talks to try to reach an agreement on Iran’s nuclear program. A peaceful solution would remove the threat of war, which could block the flow of global oil and drive up its price.
A barrel of U.S. crude briefly fell below $64 before erasing losses and rising again to $65.47, up 0.1%.
On foreign stock markets, indexes rose modestly in Europe, after a mixed performance in Asia.
South Korea’s Kospi rose 3.7% to a new record, driven by gains for technology-related stocks. This has already increased by almost 50% since the turn of the year.
Hong Kong’s Hang Seng, meanwhile, lost 1.4%.
In the bond market, yields on government bonds fell. The yield on the 10-year government bond fell to 4.02% from 4.05% late Wednesday.
A report shows that the number of American workers filing for unemployment benefits rose last week, but not more than economists expected. It also remains relatively low compared to history.
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