Nvidia’s impending profit report has created notable ripples in the U.S. stock market, contributing to a mixed but generally positive trading day as investor sentiment remains split between optimism for artificial intelligence (AI) and emerging concerns.
The S&P 500 saw a 0.7% increase, recovering losses from earlier in the week as fluctuations in stock prices highlighted the challenge investors face in distinguishing potential winners from losers amid the AI explosion. By late morning, the Dow Jones Industrial Average rose by 210 points, or 0.4%, while the Nasdaq composite climbed 1.1%. Nvidia stood out as a key driver of this upward momentum, experiencing a 2.2% increase, despite more stocks within the S&P 500 declining than advancing.
Analysts are eagerly anticipating Nvidia’s earnings report, projecting a remarkable 70% increase in profit, amounting to $37.52 billion. This translates to an average daily profit exceeding $400 million during the last quarter. Nvidia has established itself as a bellwether on Wall Street, heavily influencing market trends, especially in light of advancements in AI technology.
However, the investor enthusiasm surrounding AI has recently begun to be tempered by apprehensions regarding substantial investments from major companies like Alphabet and Amazon in Nvidia’s chip technology. Concerns are mounting that these companies may struggle to recoup their substantial expenditures through enhanced productivity gains, raising the fear of potential cutbacks in spending that would affect Nvidia directly.
Additionally, investors are scrutinizing various sectors potentially threatened by AI-driven competition, resulting in unexpected and rapid sell-offs across diverse industries such as software, logistics, and legal services. This unease complicates an already jittery market, particularly in the wake of newly announced tariffs by President Trump to replace those previously invalidated by the Supreme Court.
Despite these concerns, Darrell Cronk, Chief Investment Officer for Wealth & Investment Management at Wells Fargo, advocates for a balanced perspective, noting that the robust profit growth reported by U.S. companies for the end of 2025 could bolster segments of the stock market that had been overshadowed by the AI hype and the bigger tech firms.
In particular, some smaller companies have benefited significantly, with notable gains such as Cava Group, which surged 23.9% after surpassing profit and revenue expectations. This marked its first fiscal year with over $1 billion in revenue, reflecting a 22.5% increase compared to the prior year. Similarly, Axon Enterprise, known for its AI-powered devices, saw its stock leap by 21.5% due to robust earnings.
Conversely, First Solar faced a 13.7% drop following underwhelming profit figures, while Lowe’s fell 4.5% despite exceeding profit forecasts, as the retailer’s outlook for 2026 did not meet investor expectations. CEO Marvin Ellison indicated that the broader housing market continues to navigate challenges, leading to declines in stocks for Home Depot and various homebuilders.
Internationally, market conditions appeared more positive, with most European and Asian indexes experiencing rises. The Japanese Nikkei 225 advanced by 2.2%, and South Korea’s Kospi increased by 1.9%.
On the bond front, the yield on the 10-year Treasury remained stable at 4.04%, consistent with its position from Tuesday.
As the market looks ahead, all eyes remain on Nvidia, with its upcoming earnings report expected to play a crucial role in shaping both investor sentiment and broader market trends.
