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Nvidia earnings beat market estimates

Chipmaking giant Nvidia, which has become the poster child for the artificial-intelligence-driven stock rally this year, forecast quarterly revenue higher than market expectations and posted solid quarterly figures late Wednesday. The effects on the broader market were muted, however, with Asian stocks under pressure due to Federal Open Market Committee (FOMC) minutes that were more hawkish than expected. On Thursday, market participants will dissect a slew of flash Purchasing Managers’ Index (PMI) data, looking for clues about the relative strength of the US versus Europe, after Composite PMI in the US slipped below the euro area last month.

Shane Strowmatt, LGT
Reading time
5 minutes
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Nvidia forecast revenue at USD 28 billion for the fiscal second quarter, beating market expectations. It also announced a ten-for-one stock split as of June 7, as well as an increased dividend. For the quarter ending April 28, the chipmaker reported revenue of USD 26.04 billion and earnings per share of USD 6.12, which also beat analysts’ estimates. Nvidia has become one of the largest benefactors of the recent artificial intelligence (AI) trend as its chips are used in AI applications. Last quarter, after announcing results in February, the company added the largest amount to its market capitalisation of any stock in a single trading day.

On Wednesday, Nvidia stock surged more than 6% in after-hour trading und lifted other chipmakers such as AMD and Intel along with it. The broader US indices couldn’t benefit from the earnings results, however, which were announced after the bell. The Dow Jones Industrial lost 0.5% and the S&P 500 fell 0.3%. The Nasdaq-100 finished Wednesday’s session marginally lower.

The FOMC minutes, which were released late Wednesday, pressured markets in Asia, after they showed that some members of the monetary policy board are concerned that current interest rate levels may not be sufficient to combat sticky inflation. In line with that narrative, the Bank of Korea became the next central bank to wait it out on Thursday, keeping its benchmark policy rate steady at 3.5%, in line with market expectations. South Korea’s Kospi was trading up 0.1% after the announcement and Japan’s Nikkei 225 gained about 1%. In Australia, the S&P/ASX 200 was down 0.5% after Composite PMI came in the lowest in three months, falling to 52.6 from 53.0 in the previous month. Hong Kong’s Hang Seng Index was trading 1.6% lower, while the Shanghai Composite was down 1.3%.

Strengthening the narrative that rates could remain higher for long, the Consumer Price Index in the UK increased by 2.3% in April when compared with the same month the previous year. While that figure was clearly lower than March’s 3.2% inflation, it was still above the Bank of England’s 2% target and higher than economists’ expectations. The hotter-than-expected inflation rate dashes traders’ hopes that the central bank will begin cutting rates in June. The pound shot up versus the dollar following the release of the inflation data on Thursday. Adding to Britain’s economic concerns, the government called for national elections on 4 July.

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: Purchasing Managers’ Indices from several countries throughout the day, including France, Germany, the euro area, UK, and US; interest rate decision by the Turkish central bank, US weekly initial jobless claims, US new residential sales.


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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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