Nvidia’s latest profit report, despite exceeding expectations, has not been well-received by investors, leading to a downturn in Wall Street indices on Thursday. The S&P 500 experienced a 0.7% decline, influenced by earlier fluctuations driven by the surge of interest and uncertainty surrounding artificial intelligence (AI). The Dow Jones Industrial Average saw a minimal drop of 10 points, less than 0.1%, while the Nasdaq composite faced a more substantial decrease of 1.4%.
Nvidia’s performance was notable, showcasing strong profit growth and an optimistic revenue forecast that once again surpassed Wall Street estimates. However, the enthusiasm typically associated with such stellar results seemed to wane this time, as indicated by a significant 4.6% drop in Nvidia’s stock. CEO Jensen Huang emphasized that customers are eager to invest in AI technology, referring to the company as the driving force behind the “AI industrial revolution.” Nevertheless, concerns are emerging that as companies increasingly invest in AI, they may later scale back their spending on Nvidia’s products if doubts arise regarding potential returns on investment.
As the largest stock in the U.S. market by value, Nvidia’s performance has a significant impact on the S&P 500, accounting for over two-thirds of the index’s decline on Thursday. Without Nvidia and competitor Broadcom, the S&P 500 could have seen a higher standing.
On a more positive note, Salesforce shares increased by 3.1% following the company’s better-than-expected profit report for the last quarter. Although Salesforce stock has dropped over 25% this year, the recent performance, coupled with significant announcements—such as a $50 billion stock buyback and increased dividends—provided a boost. CEO Marc Benioff noted that AI serves as a beneficial force for the business, despite concerns about competition from AI-driven entities.
Investors are currently cautious with various companies across diverse sectors experiencing heightened scrutiny, as fears loom that they may be outpaced by advancements in AI or rendered obsolete. Notably, software companies have faced considerable fluctuations, prompting a widely followed exchange-traded fund tracking the sector to rise 2.2% despite year-to-date losses.
In other developments, Warner Bros. Discovery’s shares dipped 0.3% after posting a $252 million loss for the fourth quarter. However, investors appear more focused on potential acquisition offers than on the financial report.
Global oil markets have shown volatility as the U.S. engages in indirect talks with Iran regarding the latter’s nuclear program. A peaceful resolution could significantly affect oil prices, with benchmark U.S. crude prices briefly falling below $64 before rebounding to $65.47, marking a 0.1% increase.
Internationally, European indexes saw modest gains following a mixed close in Asia. South Korea’s Kospi surged 3.7% to reach another record high, largely driven by technology stocks, signifying an impressive nearly 50% increase since the year’s beginning. In contrast, Hong Kong’s Hang Seng index faced a 1.4% decline.
In the bond market, Treasury yields experienced a slight decline, with the 10-year Treasury yield falling to 4.02%, down from 4.05% the previous day. Additionally, a report showed a small increase in the number of U.S. workers applying for unemployment benefits, aligning with economists’ expectations, and remaining relatively low in the historical context.
