Tech Hit in Late Hours as Nvidia Fails to Inspire: Markets Wrap

(Bloomberg) — Tech got hit in late trading as Nvidia Corp.’s sales forecast disappointed some hoping for more from the chipmaker at the forefront of the artificial-intelligence revolution that has powered stocks.

A $286 billion exchange-traded fund tracking the Nasdaq 100 (QQQ) lost 1% after the close of regular trading. Nvidia sank 7% after saying third-quarter revenue will be about $32.5 billion. While analysts had predicted $31.9 billion on average, estimates ranged as high as $37.9 billion. The company also signaled that it was working through production snags with its highly anticipated new Blackwell chip.

“Here’s the issue: the size of the beat this time was much smaller than we’ve been seeing,” said Ryan Detrick at Carson Group. “Even future guidance was raised, but again not by the tune from previous quarters. This is a great company that is still growing revenue at 122%, but it appears the bar was just set a tad too high.”

On the flip side, Nvidia’s revenue more than doubled to $30 billion in the fiscal second quarter, which ended July 28. And the Santa Clara, California-based company’s board approved an additional $50 billion in stock buybacks.

To Ido Caspi at Global X ETFs, the share-repurchase announcement speaks to management’s continued commitment to profitable growth as the Blackwell transition takes place.

“While revenue growth has decelerated, 122% growth at Nvidia’s scale is still significant and speaks to a robust AI investment environment,” Caspi noted.

In the run-up to the results, a renewed bout of volatility gripped stocks. The S&P 500 — at one point — headed toward its worst drop since the Aug. 5 meltdown. The gauge pushed away from that threshold, closing down 0.6%. The Nasdaq 100 slid 1.2%. Wall Street’s favorite volatility gauge — the VIX — surged to around 17. 

Treasury 10-year yields rose two basis points to 3.84%. Bitcoin dipped below $60,000.

Future gains in global tech stocks should be more gradual after the quick rebound over the past three weeks, with potential headwinds from US macroeconomic data and further news on semiconductor export controls likely contributing to rising volatility, according to Solita Marcelli at UBS Global Wealth Management.

“However, we continue to hold a positive structural view on the broader AI theme, and see ways investors can manage their exposure to the technology that we think is set to drive growth in the years to come,” she said in a note before Nvidia’s results.

Corporate Highlights:

• Salesforce Inc. gave an earnings forecast for the fiscal year that topped analysts’ estimates, trying to satisfy investors who have concerns over slowing sales growth at the software giant.
• CrowdStrike Holdings Inc., a cybersecurity company, reported second-quarter sales that topped analysts’ estimates, assuaging concerns that a global IT outage it caused last month would have an immediate impact on results.
• OpenAI is getting closer to raising funding at a valuation of more than $100 billion in a round led by Thrive Capital, people with knowledge of the matter said.
• Boeing Co. and its largest union remain at odds on major issues in contract talks as a possible strike looms that could cripple production of its cash-cow 737 Max jetliner next month.
• Nippon Steel Corp. plans to invest an additional $1.3 billion at plants operated by United States Steel Corp. as the Japanese company steps up efforts to secure union support for a takeover bid that’s been opposed by both President Joe Biden and Donald Trump.
• Super Micro Computer Inc. said it will delay filing its annual financial disclosures.

Key events this week:

• Eurozone consumer confidence, Thursday
• US GDP, initial jobless claims, Thursday
• Fed’s Raphael Bostic speaks, Thursday
• Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
• Eurozone CPI, unemployment, Friday
• US personal income, spending, PCE; consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.6% as of 4 p.m. New York time
• The Nasdaq 100 fell 1.2%
• The Dow Jones Industrial Average fell 0.4%
• The MSCI World Index fell 0.5%
• Bloomberg Magnificent 7 Total Return Index fell 1.2%
• The Russell 2000 Index fell 0.7%

Currencies

• The Bloomberg Dollar Spot Index rose 0.3%
• The euro fell 0.6% to $1.1113
• The British pound fell 0.6% to $1.3184
• The Japanese yen fell 0.5% to 144.72 per dollar

Cryptocurrencies

• Bitcoin fell 4.7% to $58,959.11
• Ether fell 2.8% to $2,509.03

Bonds

• The yield on 10-year Treasuries advanced two basis points to 3.84%
• Germany’s 10-year yield declined three basis points to 2.26%
• Britain’s 10-year yield was little changed at 4.00%

Commodities

• West Texas Intermediate crude fell 1% to $74.74 a barrel
• Spot gold fell 0.7% to $2,507.78 an ounce

This story was produced with the assistance of Bloomberg Automation.

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