Dow leads US futures higher on Nvidia earnings

VaselineAugust 29, 2024

0 3 minutes read

Dow leads US futures higher on Nvidia earnings

U.S. stocks were poised for gains on Thursday, with the Dow leading the advance as the dust settled after Nvidia’s ( NVDA ) solid but disappointing earnings and investors reassessed the outlook for tech.

Dow Jones Industrial Average futures () rose 0.5% to anticipate a return to record highs. Nasdaq 100 futures () rose 0.1 percent, while S&P 500 () rose about 0.2 percent, following losses for all three instruments.

Shares are taking on a positive glow amid Wall Street’s lackluster reception to numbers from Nvidia, whose stellar growth streak has underpinned the market’s rally this year.

While the AI chipmaker’s quarterly profit and revenue guidance beat estimates, the size of the beats fell short of expectations. That started to raise questions about whether the AI boom had peaked and initially sent Nvidia shares down 6%, though shares are recovering in pre-market trading.

Also in the spotlight is a potential turnaround in tech stocks, given stronger gains for the Dow and Russell 2000 (RTY=F) before the bell.

Elsewhere in earnings, shares of Salesforce ( CRM ) were up after a big earnings beat by the software maker. Results from Best Buy ( BBY ), Gap ( GAP ) and Ulta Beauty ( ULTA ) are on the books Thursday.

At the same time, an update on the weekly jobless claims due could reignite the rate-cutting debate, as could a second-quarter GDP reading. The market is closely watching economic data to determine how quickly and deeply the Federal Reserve will cut interest rates, now that Chairman Jerome Powell has signaled clearly that a cut is coming in September.

Live3 updates

Thursday, August 29, 2024 at 12:10 GMT+2

HP reports another challenging quarter

Mixed quarter at best for computer and printer giant HP Inc ( HPQ ).

The company continued to see pressure in its printing business, in part due to the continued work-from-home dynamic. Meanwhile, the PC AI ramp has yet to take hold and plenty of hype remains.

“The HPQ results signaled a recovery in the PC market in the strength of the commercial PS segment, being enough to offset weaker revenue results in consumer PS as well as printing to deliver modestly better revenue in F3Q. in the other segments, which in turn affects margins and leads to a modest moderation in the earnings outlook for F4Q and FY24 relative to previous expectations,” JP Morgan analyst Samik Chatterjee said in a note to clients.

I caught up with HP CEO Enrique Lores last night. You can watch part of that chat below. Take note of what Lores said about the spread and impact of AI. I think a lot of cost cutting is coming to Corporate America next year because of AI, and we’re already seeing signs of it (see recently announced mass layoffs at TurboTax vendor Intuit ( INTU ) ).
Thursday, August 29, 2024 at 12:04 GMT+2

Fast Nvidia

Shares of Nvidia ( NVDA ) are taking a beating ahead of the market as the quarter fell short of Wall Street’s wildly high expectations.

But I think he certainly did. There was no indication from the call that demand is being slowed down, in fact quite the opposite. Everything Nvidia talked about suggested a further acceleration in demand for its high-powered AI chips.

That said, I see Street estimates tweak this morning on the back of higher spending related to the production ramp for Blackwell chips.

Good points here by Ruben Roy at Stifel:

“The Blackwell production ramp is scheduled to begin in F4Q, with expectations for several billion dollars in revenue in that quarter, followed by volume increases continuing into F2026. In the near term, higher operating expenses and modestly lower gross margin (new product mix) will moderate EPS growth. The big picture, the modernization of the data centers continues and, in our opinion, NVDA remains the main beneficiary”.
Thursday, August 29, 2024 at 11:59 GMT+2

Salesforce aims to better monetize AI

Shares of Salesforce ( CRM ) are rising after a rebound quarter after the close.

I met Salesforce President and CEO Benioff and came away very interested in the new “agents” the company will begin rolling out across companies. These will basically be AI-powered bots that interact with humans to, for example, close deals and upsell.

Interestingly, Salesforce will charge customers per conversation for the product, which could amount to real money.

Here’s my full chat with Benioff after his earnings call last night.