Nvidia surges 8.74% on blowout earnings, lifting AI and tech stocks

All three major US stock indexes closed higher Thursday, powered by Nvidia's blowout quarterly earnings. Concerns about a slowdown in AI investment eased after the chipmaker's strong results, drawing buyers into semiconductor and broader technology shares.

The Dow Jones Industrial Average rose 105.56 points, or 0.20 percent, to close at 53,569.44 on the New York Stock Exchange. The S&P 500 gained 55.29 points, or 0.72 percent, to finish at 7,730.99, while the NASDAQ Composite jumped 411.16 points, or 1.57 percent, to end at 26,541.35.

Nvidia led the rally, surging 8.74 percent on the day. Its market cap grew by roughly $442 billion in a single session, reaching approximately $5.5 trillion. According to Bloomberg, the gain was Nvidia's largest single-day percentage increase since April last year, and the market cap addition was the second-largest ever recorded for any company.

The catalyst was Nvidia's earnings report, released Thursday, which topped market expectations on both results and growth guidance. Revenue for the second quarter of fiscal year 2027 — covering May through July — came in at $96.22 billion, up 106 percent from the same period a year earlier. That beat the consensus estimate of about $92.2 billion by roughly $4 billion, extending Nvidia's streak of quarterly revenue records to 13 consecutive quarters.

Nvidia's confident growth outlook also lifted investor sentiment. The company projected fiscal year 2028 revenue would rise about 70 percent year-on-year, far exceeding the roughly 40 percent increase analysts had expected.

Markets had grown increasingly anxious in recent weeks over whether the massive AI infrastructure spending by big technology companies could translate into real revenue gains. Nvidia's strong results and upbeat guidance were seen as evidence that demand for AI investment remains robust, helping to dispel those concerns.

Melissa Brown, global head of applied research at Simcorp, said there had been considerable worry about whether major tech companies could cover their enormous AI spending through actual sales. She said Nvidia's latest results "should put that debate to rest for now."

The rally spread to other chip stocks. Broadcom rose 4.49 percent and Intel gained 4.36 percent, while SK hynix's American depositary receipts, listed on US exchanges, climbed 2.27 percent. The Philadelphia Semiconductor Index closed at 11,882.17, up 270.93 points, or 2.33 percent, from the previous session.

Software and cybersecurity stocks also advanced. Salesforce surged 22.58 percent after posting second-quarter results and raising its full-year outlook, both above market expectations. Adobe and Autodesk each gained more than 5 percent.

Attention is now turning to the Federal Reserve. Investors are watching a keynote address by Fed Chair Kevin Warsh scheduled for Friday at the Jackson Hole Economic Policy Symposium in Wyoming. With inflation data coming in hotter than expected and long-term government bond yields remaining elevated, markets are closely tracking what signals Warsh may send on the interest rate and inflation outlook.

Oil prices rebounded after four sessions of declines as hopes for US-Iran negotiations faded. West Texas Intermediate crude for October delivery settled up 1.58 percent at $83.53 a barrel on the New York Mercantile Exchange. Brent crude for October delivery on the London ICE Futures Exchange rose 2.12 percent to $89.70 a barrel.

The Wall Street Journal, citing sources, reported that the Donald Trump administration has repeatedly told mediating countries it has no intention of returning to the terms of a ceasefire MOU signed with Iran in June. With Iran conditioning the reopening of the Strait of Hormuz on US compliance with that MOU, the retreat in negotiations added upward pressure on oil prices.