Nvidia earnings ease AI bubble fears

General market commentary

U.S. equities edged higher on Wednesday, recovering from recent losses as technology shares strengthened ahead of Nvidia’s quarterly results. Nvidia gained more than 5% after the close following upbeat revenue guidance, which helped restore confidence in the durability of AI-driven demand that has underpinned much of this year’s market strength. Other major technology names, including Advanced Micro Devices, Alphabet and Palantir Technologies, also advanced. Growth-oriented sectors such as communication services and technology were among the day’s strongest performers, supported in part by Google’s release of its newest AI model, Gemini 3. The S&P 500 rose 0.38%, the Nasdaq Composite gained 0.59% and the Dow Jones Industrial Average added 0.10%. Markets experienced some intraday volatility after the release of Federal Reserve minutes showed policymakers were divided about the appropriate path for interest rates in December, prompting renewed debate about the likelihood of further policy easing.

Corporate earnings added another layer of complexity to the session. Retailers produced mixed updates, with Target and Walmart weakening as softer discretionary spending weighed on sentiment, while Lowe’s and TJX Companies delivered earnings that exceeded expectations and supported gains in their shares. Investors also monitored developments in the labour market ahead of Thursday’s delayed September jobs report, with recent private-sector surveys and small-business data pointing to easing hiring pressures but still-stable employment conditions. Although concerns linger about the sustainability of consumer spending and the broader economic outlook, equities managed to finish the day higher. Renewed optimism around AI demand, coupled with resilient corporate profitability in several key sectors, helped steady sentiment after a period of market rotation and elevated volatility.

Latest market and economic update

Asian equities rose sharply on Thursday, led by strong rebounds in Japanese and South Korean technology shares after upbeat Nvidia earnings eased fears of an AI bubble. Most regional markets followed Wall Street higher, though Hong Kong lagged as Xiaomi and local EV makers fell. Mainland Chinese indices posted only modest gains amid lighter tech exposure.

Wall Street futures jumped on Wednesday evening, led by a sharp Nvidia rally after the chipmaker delivered upbeat earnings and guidance. S&P 500, Nasdaq 100 and Dow futures all advanced, while tech peers such as AMD, Broadcom and Super Micro also climbed in after-hours trade. Broader markets rebounded ahead of key nonfarm payrolls data.

European shares closed flat on Wednesday as investors awaited Nvidia’s earnings, a key test for AI-driven equities. The STOXX 600 ended unchanged, while Germany’s DAX, France’s CAC 40, and the UK’s FTSE 100 fell slightly. Aerospace and defence shares slumped, utilities and energy declined, while tech and media equities saw mixed performance.

The dollar index remained above 100 near a six-month high, supported by mixed Fed signals and anticipation of the delayed September nonfarm payrolls report. Expectations for a December rate cut fell to 33%. The dollar strengthened against most major currencies, including the euro, currently trading at 1.1519, with gains strongest versus the yen and sterling.

Oil prices edged higher in Asia this morning after U.S. crude inventories fell 3.4 million barrels, far exceeding expectations, while gasoline and distillate stocks rose. Brent and WTI gained modestly. Investors also monitored geopolitical developments, including U.S. plans for new sanctions on Russian energy firms and reports of a potential U.S.-drafted Russia-Ukraine peace proposal.

The latest Fed minutes showed officials were divided on near-term policy, with some supporting further rate cuts and others favouring holding rates steady. While most saw potential for additional reductions, several questioned a December 25bps cut. The Fed lowered rates 25bps to 3.75–4.00% in October, reflecting differing views on economic conditions and appropriate policy.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Nvidia reported a stellar Q3, with sales up 62%, driven by $51.2 billion in data-centre revenue, beating analyst estimates. The company forecast Q4 sales of $65 billion and gross margins around 75%, while CEO Jensen Huang highlighted $500 billion in chip bookings through 2026. Shares jumped 5% in after-hours trading on the stronger-than-expected results.

Palo Alto Networks shares fell 3.8% in after-hours trading after Q1 results beat EPS and revenue expectations but guided broadly in line with forecasts. Adjusted EPS was $0.93 on $2.5 billion revenue, with annual recurring revenue up 29% to $5.9 billion. Q2 and full-year guidance largely matched estimates, with strong margins and strategic acquisitions.

Lowe’s shares rose 4% after Q3 adjusted earnings of $3.06 per share beat estimates, signalling a strong start to Q4. CEO Marvin Ellison cited seasonal decor, tools, and appliance demand, but the company projected flat comparable sales and trimmed full-year EPS guidance to $12.25, reflecting cautious consumer spending and broader economic pressures.

Block Inc. shares rose 7.5% after projecting 30% annual growth in adjusted operating income through 2028. The fintech firm expects mid-teens gross profit growth, $5.50 EPS by 2028, and introduced a new cash flow metric accounting for lending expansion. For 2026, gross profit and earnings are forecast to grow over 30%, alongside a $5 billion share buyback increase.

Schneider Electric signed nearly $2.3 billion in deals with U.S. data centre operators Switch and Digital Realty, supplying power, cooling, and switchgear systems to support AI infrastructure. The agreements highlight rising demand from hyperscalers, with data centres now accounting for a quarter of Schneider’s revenue, while growing AI workloads increasingly strain U.S. power grids.

GE Vernova shares rose 7.3% after signing its first onshore wind repower agreement outside the U.S. with Taiwan Power Company. The deal includes 25 turbine upgrade kits and a five-year maintenance contract, extending turbine life and boosting reliability. Installation will run through 2026-27, supporting Taiwan’s renewable energy transition and maximising existing infrastructure.

MP Materials will build a rare earths refinery in Saudi Arabia with the U.S. Department of Defense and Maaden, expanding processing of critical minerals and reducing reliance on China. Meanwhile, shares rose 8.6% as Goldman Sachs initiated coverage with a Buy and $77 target, highlighting its dominant NdPr position, vertical integration, and strong long-term revenue and margin potential.

Oklo shares rose 6.5% and a further 6.1% after hours after signing a contract with Siemens Energy to design and deliver the power conversion system for its Aurora advanced reactor at Idaho National Laboratory. The deal addresses key long-lead procurements, mitigates supply chain risks, and supports potential future scaling of advanced nuclear power projects.

Netflix shares fell 3.6% as investors considered its potential acquisition of Warner Bros. Discovery’s studio and streaming assets. While the deal could add valuable content, franchises, and HBO’s brand, analysts flagged regulatory hurdles, operational challenges, and potential near-term earnings pressure. Any acquisition would likely be cash- and debt-financed, valued at $20-30 per share.

Iron Mountain shares fell almost 3% after short-seller Gotham City Research questioned its accounting and financial health. The report alleges inflated EBITDA, understated leverage, unsustainable dividends, declining volumes, and steep price hikes. Gotham values the shares at $23-$41, citing 54-74% downside, and highlighted SEC scrutiny and significant insider selling.

Jefferies upgraded Doordash to Buy, citing a reset in 2026 expectations that allows for potential outperformance while funding long-term investment. The brokerage raised 2026-27 EBITDA estimates by 5-6% and lifted its price target to $260, highlighting strong US restaurant growth, an expanding advertising business, and underappreciated execution.

Bernstein downgraded PDD Holdings, Temu’s parent, to Market-Perform from Outperform, citing a maturing domestic business, slowing user engagement, and the need for clearer investor communication and disciplined capital use. Despite in-line Q3 revenue and stronger profits, softer marketing and on-demand capabilities pressure growth. Price target cut to $135 from $140.

Yardeni Research expects the S&P 500 to reach 7,000 by year-end despite AI bubble concerns, consumer strain, and credit market worries. It lowered meltup odds to 15% and raised bearish risks to 30%. While short-term sentiment shows “extreme fear,” record retail revenues, rising sales, and resilient private credit support a potential market rebound.

Barclays raised its S&P 500 year-end 2026 target to 7,400, up 11.4% from Wednesday’s close, citing strong megacap tech and improving monetary and fiscal conditions. EPS forecasts were lifted to $305, driven by AI-led tech growth, though non-tech sectors face inflation and unemployment risks. Rate cuts support valuations, while midterm elections remain potential headwinds.

Upcoming data and events

Key U.S. data today include September nonfarm payrolls, unemployment rate, average hourly earnings, and jobless claims, alongside Philly Fed indices and October existing home sales. Earnings are due from Walmart (Q3 2026) and Intuit (Q1 2026), providing insight into retail and software sector performance amid broader economic trends.

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