Nvidia (NVDA) Surges Following Strong Earnings and Positive Outlook on AI Demand

Shares of Nvidia (NVDA) surged Thursday after the software company released better-than-expected earnings results and boosted current quarter guidance. It also reported that chip demand for Artificial Intelligence (AI) applications such as ChatGPT is surging.[0]

Nvidia (NASDAQ:NVDA) soared over 14% following the announcement, with Wall Street analysts praising the chip maker. The stock continued to gain momentum in Monday’s premarket trading, rising 0.92% to $235.01. The S&P 500 Index (SPX) also rose 0.31% to 3,982.24, while the Dow Jones Industrial Average (DJIA) gained 0.22% to 32,889.09.[1]

The market was also focusing on the U.S. core Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation.[2] The average prediction of economists is that the Core PCE Price Index will be +0.4% monthly and +4.3% yearly in January, compared to the prior figures of +0.3% m/m and +4.4% y/y.[2]

Meanwhile, the University of Michigan’s consumer sentiment index rose to a 13-month high of 67.0 in February, while the Commerce Department’s durable goods orders report showed a 4% drop in January, more than the expected 4.0% fall.[3]

The Commerce Department also reported that personal spending jumped +1.8% m/m in January compared to expectations of +1.3% m/m.[3]

The Commerce Department is scheduled to release the durable goods orders report for January at 8:30 a.m.[4] [5] The average expectation among economists is that durable goods orders will drop by 4% in January, undoing most of the 5.6% rise that occurred in December.[6] After declining by 0.2% in December, core durable goods orders (excluding volatile transportation orders) may have increased by 0.1%.[5]

On Monday, the 10-year yield increased to 3.97%.[6] The number of initial unemployment claims in the United States unexpectedly decreased by 3,000 to 192,000 in the last week, which demonstrates a more robust labor market than anticipated, as analysts had predicted an increase to 200,000.[7]

As the trading day neared its end, the tech-dominated Nasdaq Composite (COMP) was in focus.[8]

0. “Nvidia Shares Soar on Earnings Beat, Chip Demand for AI Applications” Investopedia, 23 Feb. 2023, https://www.investopedia.com/nvidia-shares-soar-on-earnings-beat-chip-demand-for-ai-applications-7112912

1. “Nasdaq, S&P, Dow rebound after suffering their worst weekly loss in 2023” msnNOW, 27 Feb. 2023, https://www.msn.com/en-us/money/markets/nasdaq-sandp-dow-rebound-after-suffering-their-worst-weekly-loss-in-2023/ar-AA17ZLQs

2. “Futures are Signaling a Weak Open for Wall Street, U.S. PCE Data In Focus” Barchart, 24 Feb. 2023, https://www.barchart.com/story/news/14518036/futures-are-signaling-a-weak-open-for-wall-street-u-s-pce-data-in-focus

3. “Stocks Set To Open Higher After Worst Week Of The Year, Retail Earnings In Focus” Barchart, 27 Feb. 2023, https://www.barchart.com/story/news/14581554/stocks-set-to-open-higher-after-worst-week-of-the-year-retail-earnings-in-focus

4. “Wall Street Might Bounce Back At Open” RTTNews, 27 Feb. 2023, https://www.rttnews.com/3346731/wall-street-might-bounce-back-at-open.aspx

5. “Nasdaq, S&P 500 Futures Rebound In New Trading Week But Rising Bond Yields Remain A Risk – Invesco QQQ Tr” Benzinga, 27 Feb. 2023, https://www.benzinga.com/news/earnings/23/02/31065503/nasdaq-s-p-500-futures-rebound-in-new-trading-week-but-rising-bond-yields-remain-a-risk

6. “Dow Jones Rallies 300 Points After Economic Data; Tesla Stock Surges On Production Ramp” Investor’s Business Daily, 27 Feb. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-climb-ahead-of-economic-data-tesla-stock-jumps-on-production-ramp/

7. “Stock Market Today: Nasdaq Outperforms as Nvidia Outlook Impresses” Kiplinger’s Personal Finance, 23 Feb. 2023, https://www.kiplinger.com/investing/stocks/stock-market-today-022323-nasdaq-outperforms-as-nvidia-outlook-impresses

8. “Nasdaq, S&P, Dow erase gains to trade lower; NVIDIA soars after results” Seeking Alpha, 23 Feb. 2023, https://seekingalpha.com/news/3940061-nasdaq-sp500-dow-jones-stock-market-economic-data-nvidia