The technology-heavy Nasdaq outperformed peers at Thursday's close, with the Nasdaq Composite gaining 411.16 points, or 1.57%, to 26,540.78, while the S&P 500 Information Technology sector rose to become the best gainer among the S&P 500's 11 constituents. According to Reuters, the S&P 500 gained 55.03 points, or 0.72%, to end at 7,730.73 points, while the Dow Jones Industrial Average rose 100.33 points, or 0.19%, to 53,564.21. This strong performance was primarily driven by Nvidia's exceptional quarterly results and robust forward guidance, which has reaffirmed the strength of the AI boom and fueled gains across technology stocks.
Nvidia delivered a quarter that blew through every line Wall Street had modeled, with revenue of $96.2 billion for the quarter ended July 26, up 18% sequentially and 106% from a year ago. As reported by latest market analysis, Data Center revenue landed at $89.0 billion, up 117% year over year, with non-GAAP earnings per diluted share coming in at $2.22 against a consensus of $2.09. The company also guided revenue growth of approximately 70% in fiscal 2028, significantly above consensus modeling near 45%. According to Morgan Stanley, Nvidia's forecast for revenue growth of 70% next year is well above their estimate for a 52% rise and the consensus estimate closer to 40%. The company also warned that shortages of memory components could curb the pace of the industry's growth, highlighting the capital-intensive nature of AI expansion.
Major semiconductor stocks experienced a dramatic turnaround on Thursday, with the VanEck Semiconductor ETF jumping 3.5% in premarket and the iShares Semiconductor ETF gaining 3% following Nvidia's exceptional quarterly results. According to latest reports, Marvell Technology ran 5.8%, Micron Technology added 4.5%, and Arm climbed more than 3% in pre-market trading. This represents a significant shift from the previous session when major semiconductor stocks like Advanced Micro Devices (AMD) shares fell 0.9% to $472.27, Micron Technology declined 1.86% to $918.03, and Intel slipped 1.97% to $90.27 in pre-market trade. Nvidia shares also fell 0.54% to $226.75, despite having surged 8.74% on Thursday following its blockbuster quarterly results.
The software sector received a significant boost as Salesforce surged after raising annual revenue and profit forecasts, and rolling out a new plug-in integrated with Anthropic's Claude AI models, with the stock set for its best one-day jump in six years. According to Reuters, CrowdStrike climbed after the cybersecurity software provider raised its annual revenue forecast and topped second-quarter earnings estimates. These gains have calmed worries that advanced AI tools could upend the traditional software industry, boosting investor appetite for beaten-down software stocks and narrowing the gap with semiconductors, which are seen as the primary beneficiaries of the AI boom. Other software firms, including ServiceNow and Palo Alto Networks, also rose following these positive developments.
The semiconductor sector's strong performance has driven the Nasdaq 100 futures ripping 270 points, or 0.92%, to 29,559.50 in overnight trading, creating a 62-basis-point gap between the broad market and the Nasdaq 100. As reported by market analysis, this represents a concentrated, chip-led bid rather than a broad risk-on melt-up. With Nvidia results out, investor attention now turns to Federal Reserve Chair Kevin Warsh's first Jackson Hole address on Friday for hints on the central bank's stance on the latest inflation data and the U.S. Treasury's efforts to tame yields. According to Allianz Investment Management, while Nvidia's earnings beat and strong guidance restarted the party, market headwinds continue to be a factor as higher interest rates, geopolitical tensions and global trade remain concerns across other sectors.
