Nvidia beats Wall Street but sellers drag down market

Nvidia’s latest blowout profit report is being waved off by Wall Street on Thursday, and it is dragging the US market down.

The S&P 500 fell 0.8 per cent following its swivels earlier in the week, driven by hopes and worries created by the artificial intelligence revolution. The Dow Jones Industrial Average was down 12 points, or less than 0.1 per cent, as of 1:48 p.m. Eastern time, and the Nasdaq composite was 1.6 per cent lower.

Nvidia, whose chips are helping to power the AI boom, reported another stellar quarter of profit growth that breezed past analysts’ expectations. It also gave a forecast for revenue in the current quarter that once again topped Wall Street’s estimates.

But such blowout performances have become so typical for Nvidia that they are losing their oomph. Its stock sank 5.3 per cent. Earlier in the morning, it had been down as much as 5.6 per cent and on track for its worst loss since April.

“Our customers are racing to invest in AI compute — the factories powering the AI industrial revolution and their future growth,” Nvidia CEO Jensen Huang said.

Worries are nevertheless rising that those customers may eventually curtail their spending on Nvidia’s chips and other AI investments amid doubts about whether they can make back all their billions of dollars through future gains in productivity.

Because Nvidia is the largest stock in the US market by value, it has more influence on the S&P 500 than any other. That is a large part of why the index fell, even though most of the stocks within it rose.

Back on the winning side of Wall Street on Thursday was Salesforce, which rose 3.2 per cent after it likewise reported a stronger profit for the latest quarter than analysts expected.

It is a return to gains for the stock, which is still down roughly 25 per cent for the young year so far. It has been under pressure because of worries that AI-powered competitors could undercut its business.

Salesforce uses AI itself in its offerings that help customers manage relationships with their own customers. It also made several announcements that typically give a stock’s price a boost: it will send up to US$50 billion to shareholders through buybacks of its stock, and it increased its dividend.

“Agentic AI is a tailwind for our business,” CEO Marc Benioff said.

Stocks of companies in industries as far flung as trucking logistics and financial services have likewise come under sudden and aggressive attacks this year by investors who fear their businesses may lose out to AI, or even become obsolete.

The sharpest swings have hit software companies, and a widely followed ETF that tracks the industry rose 1.1 per cent on Thursday to trim its loss for the year so far to 22.6 per cent.

Elsewhere on Wall Street, Warner Bros Discovery shares edged down 0.1 per cent after the entertainment giant reported a US$252-million loss for the fourth quarter. That did not seem to bother investors, who are likely more interested in which acquisition offer – Netflix or Paramount Skydance – the company and its shareholders ultimately accept.

Some of the sharpest swings in financial markets were for oil, where prices swivelled as the United States and Iran held indirect talks to try to reach a deal about Iran’s nuclear programme.

A peaceful solution would remove the threat of war, which investors worry could block the global flow of oil and drive up its price. The US military has already built up the largest force of American warships and aircraft in the Middle East in decades, which has raised the stakes. The current round of talks feels “make or break”, according to strategists at Macquarie.

A barrel of benchmark US crude briefly fell as low as US$63.60. But it erased the bulk of that loss and was most recently down 0.2 per cent at US$65.24. Brent crude erased an earlier loss to rise 0.1 per cent to US$70.78 per barrel.

In stock markets abroad, indexes rose modestly in Europe following a mixed finish in Asia.

South Korea’s Kospi leapt 3.7 per cent to another record, driven by gains for tech-related stocks. It has already surged nearly 50 per cent since the turn of the year.

Hong Kong’s Hang Seng, meanwhile, lost 1.4 per cent.

In the bond market, Treasury yields eased. The yield on the 10-year Treasury fell to 4.03 per cent from 4.05 per cent late Wednesday.

A report showed that the number of US workers applying for unemployment benefits ticked up last week, but not by any more than economists expected. It also remains relatively low, compared with history.

AP