News that Nvidia had landed another big deal didn’t appear to be doing much for the chip maker’s stock price early Wednesday. It’s the Federal Reserve, not artificial intelligence, that investors are focused on right now.
The Big Tech stock barely moved in the premarket, rising just $0.01 to $115.61, while futures for the benchmark S&P 500 index were up 0.1%.
The move higher came as investors digested a new AI deal between Nvidia and cloud software company Salesforce.
They said their collaboration will develop interactive avatars that can assist with tasks like crisis management events, such as predicting and adjusting travel or shipping routes based on live weather data. Salesforce expects to deploy billions of what it’s calling its Agentforce agents in the coming years.
It shouldn’t be a surprise that the partnership didn’t move the needle for Nvidia shares. Investors already have enough evidence that the semiconductor designer’s chips will be essential for AI—as shown by the big deals it’s signed with Facebook parent Meta Platforms and Elon Musk’s start-up xAI, among others.
Instead, the market is squarely focused on the Fed’s next move. The central bank is widely expected to cut interest rates on Wednesday, but traders are split on how much.
The decision could have a big impact on how Nvidia shares perform over the rest of 2024. The stock racked up massive gains over the first half of the year but has struggled since amid worries that a slowing U.S. economy could sap AI demand. The Fed opting for a jumbo 50-basis-point cut could ease some of those concerns.
Among other chip makers, Advanced Micro Devices and Qualcomm both ticked up 0.1% ahead of Wednesday’s opening bell, while Broadcom rose 0.3%.
Salesforce’s own shares climbed 0.8% after the tie-up with Nvidia was announced.
Arjun Bhatia, an analyst for boutique bank William Blair, said in a research note that he’s expecting the company’s Agentforce program to “take over as the new way that enterprises will consume AI.”
“The event reinforced our confidence in Salesforce being a long-term AI winner due to its enviable position as a trusted enterprise software partner that sits on top of valuable data for multiple front-office domains, such as sales, marketing, and customer service,” Bhatia, who rates the stock at Outperform, added.
