U.S. stocks finished Thursday's session in positive territory, with all three major indexes closing higher as Nvidia's earnings report injected fresh optimism into the AI trade. The Dow Jones Industrial Average advanced 105.56 points, or 0.20%, to settle at 53,569.44. The S&P 500 climbed 55.29 points, or 0.72%, to 7,730.99, while the Nasdaq Composite jumped 411.15 points, or 1.57%, to 26,541.35.
NVIDIA shares soared 8.74% after the chipmaker surpassed analyst expectations and issued robust revenue guidance for the coming year. The company projected fiscal 2028 revenue growth of 70%, a figure far exceeding the 44% that analysts had anticipated, with its second-quarter revenue more than doubling year over year. Semiconductor stocks broadly rallied in sympathy, with Broadcom advancing 4.5%, while SK Hynix and Intel gained 2.27% and 4.36%, respectively. The VanEck Semiconductor ETF (SMH) rose 3% on the day.
"There has been a lot of discussion recently about the circular financing among all the hyperscale customers, and the debate centers on whether their revenue is sufficient to cover the massive costs they are taking on. Perhaps this will temporarily dampen that conversation," said Melissa Brown, managing director of investment decision research at SimCorp. She added that other names in the AI trade are simply "riding on Nvidia's coattails."
Beyond NVIDIA and other chip stocks, Salesforce.com surged nearly 23% after posting second-quarter revenue that beat Wall Street estimates. Software peers such as Adobe and Autodesk also saw solid gains, climbing 5.7% and 6%, respectively. In the cybersecurity space, Okta Inc. jumped nearly 29%, and CrowdStrike rose 20% after both companies exceeded analyst forecasts and raised their outlooks, citing robust demand driven by agentic AI. Other cybersecurity names followed suit, with Palo Alto Networks particularly strong, advancing approximately 13%.
Brown pointed out that the wide divergence between AI-related stocks and the rest of the market has resulted in low correlation among equities, which is impacting risk dynamics. "Volatility is high, but correlation is low, which keeps overall volatility readings at subdued levels," she said. "We worry this could give investors a false sense of security."
Traders are now turning their attention to the Federal Reserve's annual symposium in Jackson Hole, Wyoming, where Fed Chair Kevin Warsh is scheduled to deliver the keynote address on Friday.
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