Stocks Churn Before Nvidia’s Make-or-Break Results: Markets Wrap

(Bloomberg) — Stocks churned ahead of key earnings from Nvidia Corp. that could help reignite the artificial intelligence-driven rally.

Just hours ahead of results from the chipmaker that’s powered the AI revolution, traders took some chips off the table as Apple Inc. and Tesla Inc. sank. Nvidia, which had been under pressure after an over 1,000% surge from its bear-market low, was up 3%. Trading in the options market suggests investors are pricing in a potentially 10% move in the shares after its high-stakes numbers.

Reports from the leader in AI chips have become some of the most important events of the year for Wall Street. Nvidia’s fourth-quarter earnings may be the most critical yet, coming after the emergence of China-based startup DeepSeek scrambled the outlook for AI infrastructure needs.

“The reality is, we need a good set of numbers from Nvidia to keep this bull track in place in the US,” said Guy Miller at Zurich Insurance Co. “It will be important that the numbers are good and the outlook is good. If it’s a really disappointing reading the market will be vulnerable to a further setback.”

The S&P 500 was little changed. The Nasdaq 100 added 0.2%. The Dow Jones Industrial Average fell 0.5%.

In other corporate news, Amazon.com Inc. rebooted Alexa with AI. Super Micro Computer Inc. surged 19% after submitting outstanding financial reports to become compliant with Nasdaq rules. AppLovin Corp. pared losses after reports from two short sellers spurred a stock plunge of as much as 23%.

The yield on 10-year Treasuries fell four basis points to 4.25%. A dollar gauge was little changed.

Nvidia’s results will land at a time when investors are increasingly on edge over lofty valuations and uncertainty about massive spending on AI.

“Investors will be watching closely for any signs that Nvidia’s key customers are reining in spending after years of hefty capital outlays,” said Fawad Razaqzada at City Index and Forex.com. “Such a shift would be particularly concerning in light of DeepSeek’s disruptive influence and the rise of its low-cost AI model.”

Nvidia Results to Show the Status of AI Build-Out: Preview

“We expect a narrower earnings beat from Nvidia, but a beat nonetheless, and that comes even with the recent DeepSeek fears, which we believe are already priced into Nvidia’s current stock price,” said Chris Brigati at SWBC.

Wall Street will also be looking for signs that the company is transitioning smoothly to its new Blackwell design from the older Hopper lineup. The shift may cause customers to slow purchases until there’s better availability of the new products.

“Despite recent concerns about cost-efficient AI alternatives, major clients’ reaffirmed spending plans, and Nvidia’s dominance in AI chips suggests resilience,” said Kenny Polcari at SlateStone Wealth. “The report will likely clarify whether the Blackwell launch and sustained hyperscaler demand can propel Nvidia past short-term market noise.”

Big tech will face perhaps its biggest test of the earnings season when Nvidia reports results. The chipmaker, whose eye-popping, roughly 170% rally in 2024 was a significant driver of S&P 500 gains, has slumped this year.

To Kathleen Brooks at XTB, Nvidia’s results could determine whether the US tech sector can reverse its fortunes and start to boost the stock market as we move through the first quarter.

“Nvidia is the bellwether and market-darling stock that is of vital importance to the broader markets,” said Chris Brigati at SWBC. “Its performance provides meaningful guidance for the broader market tone.”

Why Nvidia Is the King of AI Chips, and Can It Last?: QuickTake

“Nvidia’s stock is in a consolidation, which could take 6-12 months, though any major news with Nvidia, either from its earnings report on Wednesday, or from CEO Jensen Huang’s keynote at the firm’s annual GPU Technology Conference in March, could change that,” said Mary Ann Bartels at Sanctuary Wealth.

The dominance of big tech made life miserable for stock pickers in recent years. With the group reaching a double-digit drop from its peak, opportunities to uncover the next market vanguards have arisen, says Morgan Stanley’s Lisa Shalett.

Shalett sees “money to be made” in owning standouts within financial services, domestic industrials, energy and materials mining companies, as well as consumer services like media and entertainment. She also likes health care, one of last year’s worst laggards, pointing to interesting generative AI applications for the sector.

Stock pickers are holding their smallest allocations of megacap names since the global financial crisis, boosting their funds’ performance in a year that has kicked off with a slide in technology shares.

That under-allocation is turning out to be a blessing in disguise. With the so-called Magnificent Seven faltering this year, active investors’ are seeing a performance boost: Roughly 49% of actively managed mutual funds and exchange-traded funds that compare themselves to the S&P 500 are beating the index in 2025, according to Morningstar Direct. That’s up from 38% during the same time last year and far above the 17% outperformance level of the last decade.

US stock gains are likely to continue broadening beyond the technology sector, according to Savita Subramanian at Bank of America Corp.

“There are a lot of attractive opportunities within the S&P 500 that may not be the Magnificent Seven,” the strategist told Bloomberg Television. “The theme is not necessarily ‘rest of world over US,’ but broadening trends outside of just mega cap tech.”

Corporate Highlights:

• General Motors Co. plans to step up its program of buybacks by repurchasing $6 billion in shares and raising its dividend, rewarding investors by pushing more cash off its balance sheet.
• Lowe’s Cos. forecast sales to rise this year, an early sign that consumers are starting to spend again after staying on the sidelines due to higher rates.
• Chevron Corp. is interested in buying Phillips 66’s stake in a chemicals joint venture that activist Elliott Investment Management LP is pushing the oil refiner to exit, according to people familiar with the matter.
• Off-price retailer TJX Cos. reported positive quarterly results, rebounding after its TJ Maxx and Marshalls brands saw softer-than-anticipated sales last quarter.
• Lucid Group Inc.’s revenue for the fourth quarter beat the average analyst estimate. The company will begin a search for a new leader after Chief Executive Officer Peter Rawlinson stepped aside to serve as an adviser.
• ZoomInfo Technologies Inc., infrastructure software company, reported fourth-quarter results that beat expectations and gave an outlook that is seen as strong.
• Cava Group Inc., one of the few chains that has managed to increase customer visits even as peers struggle, gave a sales outlook for 2025 fell short of expectations.
• Advance Auto Parts Inc. projected that comparable sales would fall more than Wall Street anticipated in the current quarter.
• Workday Inc., a human-resources software company, reported fiscal fourth-quarter results that beat expectations.
• Instacart posted weak fourth-quarter revenue and projected lower-than-expected adjusted earnings in the current period, stoking concerns from investors about its ability to grow without hurting its profit margins.

Key events this week:

• Eurozone consumer confidence, Thursday
• US GDP, durable goods, initial jobless claims, Thursday
• Fed’s Jeff Schmid, Beth Hammack, Patrick Harker, Michael Barr, Michelle Bowman speak, Thursday
• Japan Tokyo CPI, industrial production, retail sales, Friday
• US PCE inflation, income and spending, Friday
• Fed’s Austan Goolsbee speaks, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 was little changed as of 1:29 p.m. New York time
• The Nasdaq 100 rose 0.2%
• The Dow Jones Industrial Average fell 0.5%
• The MSCI World Index rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro fell 0.1% to $1.0499
• The British pound rose 0.2% to $1.2694
• The Japanese yen was little changed at 148.94 per dollar

Cryptocurrencies

• Bitcoin fell 3.8% to $85,371.74
• Ether fell 6.9% to $2,337.07

Bonds

• The yield on 10-year Treasuries declined four basis points to 4.25%
• Germany’s 10-year yield declined two basis points to 2.43%
• Britain’s 10-year yield was little changed at 4.50%

Commodities

• West Texas Intermediate crude fell 0.6% to $68.50 a barrel
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Emily Graffeo, John Viljoen, Sujata Rao, Alice Gledhill and Winnie Hsu.

©2025 Bloomberg L.P.