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U.S. stocks turn lower after Nvidia's blowout earnings on AI surge

AuthorLiz Moyer
Published 08/24/2023, 07:21 AM
Updated 08/24/2023, 11:11 AM
© Reuters.

Investing.com -- U.S. stocks got a jolt from tech after Nvidia's stronger-than-expected earnings report and outlook, which demonstrated the surge of activity around artificial intelligence.

At 10:51 ET (14:51 GMT), the Dow Jones Industrial Average was down 68 points or 0.2%, while the S&P 500 was down 0.4% and the NASDAQ Composite was down 0.7%. All three indexes were trading higher earlier in the session.

Nvidia (NASDAQ:NVDA), the world's most valuable chipmaker, posted stunning quarterly results after the close Wednesday, crushing already sky-high estimates, with revenue of $13.5 billion during the second quarter, more than doubling the prior mark of $6.7B.

The California chipmaker was boosted by the intensifying frenzy over generative AI, which looks set to continue as the year progresses as the company predicted third quarter revenue would climb to $16B or a year-over-year increase of 170%.

Nvidia stock jumped over 1.6%, helping the likes of Microsoft (NASDAQ:MSFT) and Google owner Alphabet (NASDAQ:GOOGL), both of which are rushing to incorporate generative AI into their Web search platforms and other services, higher.

Jobless claims, durable goods due

However, this positive tone isn’t universal, with Dow futures in the red after U.S. business activity readings undershot expectations, raising concerns about future economic growth, while fears of an overheated jobs market have also eased a touch.

Initial jobless claims of 230,000 last week were lower than expected and lower than the prior week.

The main focus, though, will be the start of the yearly gathering of central bankers in Jackson Hole, Wyoming later Thursday, with investors focused on comments from Federal Reserve Chair Jerome Powell on Friday for fresh policy signals.

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More retail earnings

Away from Nvidia, there are more earnings to digest, mainly in the retail sector, including from discount retailer Dollar Tree (NASDAQ:DLTR), casual clothing retailer Gap (NYSE:GPS), beauty salon Ulta Beauty (NASDAQ:ULTA), and department store chain Nordstrom (NYSE:JWN). Dollar Tree beat expectations for revenue and profit, with better than forecast same store sales gains, but margins narrowed. Shares were down 10%.

Crude steadies after U.S. inventories

Oil prices edged higher Thursday as traders digested a mixed set of U.S. inventories numbers ahead of Friday’s key speech from Fed chief Jerome Powell.

Data on Wednesday showed an unexpected, substantial build in U.S. gasoline and distillate inventories over the past week, which pointed to weakening U.S. fuel demand, but also a bigger-than-expected draw in broader crude inventories.

(Peter Nurse and Oliver Gray contributed to this item.)

Latest comments

There is a limit how much the gap between real numbers and official statistics can extend without breaking. Of course, the media makes colossal efforts to keep the things going, in “everything is fine” tune. The goal is to keep it this way until next year elections. Will it work? Maybe… but anyway the dam will get fully broken after the elections….and this is without taking into account geopolitics that can capsize the whole thing at any time in a matter of days. In other words, Titanic is unsinkable.
The size of gap in US #s are nowhere near the size of gap in countries like China, Russia, NK, etc.  Unlike those contries, the US has private, independent parties collecting economic data to supplement & check the official #s.
 Silly musings, girl, in best case, or an outright lie in worst. There are no “independent parties” in America anymore. Everything is under control. The US data credibility is no different now from China’s data credibility.
No one is stopping you nor I from posting.  I can easily hire a survey company to run something for me and then I can post the results.  Stop thinking like someone who lives under a rock.
I am going to say this again as last time, the rate is gonna stay unchange until 1Q next year then it will get lowered! 2 out of 3 major facts of inflation in the US are eliminated. Again, we are no where even close to recession, all these soft landing stories are completely bs, inverted yield curve is not 100% for recession historically either! The Fed would not dare to crash the US banking/financial system by raising the rate further! So, regardless whatever how hawish the Fed might sound, the rate will not be hiked again!
you need to understand why there was inflation, and you cant bet against US economy as long as USD remain as world trading currency
Pow Pow will still come out and crash the market
he won’t as he can’t, the entire system runs by the banks and backed by the Jews, US will never go against the Jews’ will, never!
Good news is bad news time. And then right under 200 p/e they will start buying like crazy again. Because “cheap”.
Finally some real intelligence on the market.
we are not wrong again
so when does the build back better begin
Years ago
wakakaka. corporate good earning also badly affects the market. almost all in red
nvidia blowout earning harming the market. funny bunny. wakakaka
Maybe NVDA can release a trans chip, a CPU that identifies as a GPU, and it will help with the chip shortage.
Scammmmmmm.... USA market
US Stocks lower because of the Media keep making up stories try to create panic to retail investors
The media does not have to makeup any stories to scare investors when Biden is in the White House soiling his diapers.
That's like retrumplican elites making up stories to create panic to get their cult to vote and donate $ to them.
The NVDA hype reminds a lot of the TSLA and "electric car" hype. They pushed the market cap of TSLA over $1 trillion very quickly, then when everybody moved on to the next fad the price tanked over 60% within a few months. People are just conflating NVDA with AI technology, same as they did TSLA with electric cars. You still have to factor in valuation, and NVDA is already one of the most expensive companies in the world and price is up 20,000%+ over the past 10 years already. More people have televisions than ever now, but it does not mean that the first company that made televisions has just gone parabolic since TVs came out.
Well said
"Beat" the criminally rigged, low-ball "estimate" is on a roll.
sop, v-shaped inversion?
Big reversal today. Perhaps, funds sold tons of exciting AI-related shares to wannabe investors in pre-market.
Why don't you short NVIDIA? LOL
I did
 I don’t short stocks. Hope you do.
Scammmmmmmm
It's not practical to think that a.i. software will run on graphics cards forever. Competitors will step up to port this code to run on servers.
Nvidia own the cuda core software and infrastructure. This is their advantage. No one has managed to catch up, hence why Nvidia are where they are.
Honestly do some research and u will relaize your assumptions are incorrect
You mean like how Apple owned the publishing industry in the late 1980s and then all the software came out on cheaper Windows machines.
NVDA is a meme stock, it has over $1.3 trillion valuation and a PE that is up over 1,000% over the past 10 years. Just because earnings are good does not mean that it is not over-valued. It is not some $130 million company with an unexpected blow out earnings, it is already up massively with a massive valuation. It is one of the most expensive companies in the world already.
 With a PE of over 200, NVDA has already factored in over 20 years of earnings. You want to look for stocks that are undervalued now, not stocks that you feel will be undervalued in 10 years when the people who dumped on you will buy back.
 They did not "beat revenue", there are some people who make estimates. The stock is already up over 200% in the past 1 year, and has a PE of over 200.
Apple Is the most valuable company in the world. That tells you a lot and was with 3 trillion markercap selling overpriced tech devices.
Whistleblowing or how to explain the sudden crash?
Not quite sure....interesting to see though. Nothing new has come out. The whole market seems to be selling off, NVDA is the easy target and filled with panic buys and sells.
One stock (Nvidia) was up. The advance decline ratio has been low even though the market has been up over months. Mega-caps are going up as the whole market goes down.
Looked back to time frame of article published. Nasdaq was down. Extremely Nad reporting.
Just an incredibile rug pull today. Nasdaq went from +1.2 to -0.6. So many retail investors fell for it
you can bet the tech AI bosses have all sold today at the top - AI cant save the global economy crashing in a mound of massive debt
6% terminal rate may be too conservative.
Ummm no they arent
The Fed does not dare to risk crashing the financial system by raising the rate when inflation is already at ease!
Haha, inflation is not at ease. They fabricate to try and make people believe it's easing. Looks like they bluffed you.
If the data means nothing to you, then you might as well just putting your money into crap table
nope - that's eactly what they plan to do - they want to crash the market and destroy the financial system - massively consolidation of the banking sector and bringing in cbdcs - for the great reset - it's happening for real - folk just don't want to believe it.
Who cares? All I want to see today is Trump's mugshot. Priceless!!
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