Strong Nvidia results fail to spark after-hours rally

General market commentary

US equity markets moved higher on Wednesday, led by gains in technology ahead of quarterly results from Nvidia. The Nasdaq rose 1.3 per cent to 23,152.08, while the S&P 500 advanced 0.8 per cent to 6,946.13 and the Dow Jones Industrial Average climbed 0.6 per cent to 49,482.15. Technology, financials and communication services were among the strongest performing sectors, while real estate and industrials lagged. Investors were focused on Nvidia’s earnings announcement, with expectations for robust revenue growth and firm guidance driven by demand for artificial intelligence data centres. Among large capitalisation names, shares in Palantir Technologies, Oracle and IBM gained ground, with IBM rising more than 3 per cent following supportive commentary on valuation.

Elsewhere, the iShares Expanded Tech Software Sector ETF rebounded, while Axon Enterprise surged 18 per cent after reporting strong fourth quarter results that exceeded expectations. Economic data showed mortgage applications edged higher, supported by lower borrowing costs. US Treasury yields firmed modestly, with the 10 year yield at 4.05 per cent and the 2 year at 3.47 per cent. In commodities markets, gold and silver futures advanced, oil prices eased slightly, and US commercial crude inventories recorded a larger than expected build in the latest week.

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Asian equities rose as strong Nvidia earnings reassured investors on AI spending, lifting Japan’s Nikkei to a record and boosting regional markets. South Korea’s Samsung Electronics and SK Hynix surged to record highs, up over 5 per cent and 2 per cent respectively, as sustained AI driven chip demand and memory shortages supported share prices across the Kospi.

US equity index futures edged lower overnight, with S&P 500 futures down 0.2 per cent, Nasdaq 100 futures off 0.4 per cent and Dow futures 0.2 per cent lower. In after hours trade, Nvidia pared earlier gains despite strong results, while Salesforce fell 4.6 per cent on softer than expected fiscal 2027 revenue guidance.

European equities rose on Wednesday, supported by easing AI concerns and cautious optimism on US trade policy. The Euro STOXX 50 gained 0.9% to 6,172 and the STOXX Europe 600 climbed 0.7% to 633, both record highs. ASML added 2%, HSBC surged 7.6% on strong results, while German and French consumer confidence showed mixed trends.

The dollar index slipped to around 97.5, extending a two-day decline amid uncertainty over US tariffs and cautious investor sentiment. The currency eased against the euro, which traded at 1.1815, and weakened versus the yen on speculation of a near-term Bank of Japan rate hike. The Federal Reserve is expected to keep rates steady.

Oil prices were broadly steady in Asian trading as investors awaited a third round of US Iran nuclear talks in Geneva. Brent crude hovered near 71 dollars a barrel and WTI around 65 dollars. Markets are balancing the prospect of easing geopolitical tensions against a larger than expected 16 million barrel surge in US crude inventories.

Equities on the move

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

Nvidia posted strong January-quarter results, with sales up 94% to $68.13 billion and adjusted earnings of $1.62 per share, beating estimates. It forecast current-quarter revenue of $78 billion on robust AI processor demand, confirmed sufficient chip inventory, highlighted concentrated sales among top customers, and noted limited China revenue due to US export restrictions.

Salesforce forecast first-quarter revenue of $11.03–11.08 billion, exceeding Wall Street estimates, driven by strong demand for its enterprise software and AI agentic platform, Agentforce. The company reported Q4 revenue of $11.20 billion, slightly above expectations, and announced a $50 billion share repurchase, highlighting its focus on AI monetisation and growth in cloud services.

Snowflake forecast fiscal 2027 product revenue of $5.66 billion, above estimates, driven by strong enterprise demand for AI tools on its cloud analytics platform. Q4 product revenue rose 30% to $1.23 billion, with adjusted EPS of 32 cents. The company struck major multi-year deals with OpenAI and Anthropic and acquired Observe for $600 million.

DeepSeek, the Chinese AI lab, withheld its upcoming V4 model from US chipmakers for performance optimisation, giving early access only to domestic suppliers including Huawei. The model, trained on Nvidia’s Blackwell chips in China, is expected to launch around Lunar New Year. The move deviates from usual industry practice and may breach US export controls.

Samsung Electronics launched its Galaxy S26 smartphones, raising prices in the US and South Korea amid soaring memory chip costs. The range features AI integrations, upgraded Bixby, and in-house Exynos processors. While memory demand boosts chip margins, it pressures smartphones. The S26 Ultra includes a built-in privacy display, with rollout starting 11 March.

Lowe’s forecast full-year sales and profit below Wall Street estimates, citing a stagnant US housing market, cautious consumer spending, and tariff uncertainty. Comparable sales are expected flat to 2%, with adjusted EPS of $12.25–12.75. Q4 results beat expectations, but CEO Marvin Ellison warned that DIY demand remains weak, and growth depends on housing and consumer confidence.

Santander targets profits above €20 billion by 2028, driven by growth in the U.S. and UK, rising customer numbers, and IT transformation savings. Following Webster and TSB acquisitions, developed markets now account for nearly two-thirds of gross operating profit. The bank aims to improve efficiency to 36%, serve over 210 million clients, and maintain a 50% shareholder payout.

Diageo’s new CEO Dave Lewis cut the company’s 2026 sales forecast by 2–3% and halved the interim dividend, sending shares down nearly 10%. He highlighted consumer spending pressures, evolving drinking habits, and capacity constraints on Guinness. Lewis plans asset sales, cost cuts, price adjustments, and improved customer service to reduce debt and revive growth.

Nasdaq raised its medium-term revenue forecast for its solutions business to 9–12%, up from 8–11%, driven by strong demand in data, listing and index services. Capital access platform revenue is now expected to grow 6–10%. The exchange plans to expand clients, geographic reach, and accelerate AI deployment and market modernisation over three to five years.

Nu Holdings, operator of Nubank, reported a 50% rise in fourth-quarter net profit to $894.8 million, with revenue up 45% to $4.86 billion. Growth was driven by more customers, higher revenue per active user and stable costs. Return on equity reached 33%, while loans expanded 40% to $32.7 billion, with delinquency easing slightly.

Law firms representing nearly 20,000 Roundup plaintiffs urged a Missouri judge to delay reviewing Bayer’s $7.25 billion settlement, citing insufficient time to assess its 600-page terms. The deal would resolve most remaining claims without Bayer admitting liability, but opponents argue rushing approval could prejudice cancer patients and their families, requesting at least a 60-day delay.

Revolut is considering a share sale in the second half of 2026 as investors seek exposure to Europe’s most valuable startup ahead of a potential public listing. The UK-based fintech, valued at $75 billion last year, aims for a $150 billion IPO valuation. Deliberations are at an early stage, with no decisions on timing, size, or pricing of new shares.

Goldman Sachs analysts warn hyperscaler AI spending, by Amazon, Microsoft, Alphabet, Meta, and Oracle, is set to peak in 2026, potentially pressuring AI infrastructure shares. With capex at $667 billion, some providers’ revenue growth and valuations, including Nvidia, could slow, as rising competition and uncertainty about sustained AI demand temper investor expectations.

Bernstein analysts say Netflix has the financial strength to counter Paramount Skydance’s $31-per-share Warner Bros bid, with balance sheet capacity and $1.5 billion synergies by 2028 supporting a higher offer. However, disciplined capital allocation means the streamer could rationally walk away if the price or strategic impact no longer justifies pursuing the deal.

Bank of America maintained a Buy on Amazon with a $275 target, citing accelerating AWS revenue and expanding cloud capacity. AWS added 3.9 GW in 2025, aiming to double by 2027, potentially generating $164 bn in 2026 and $209 bn in 2027. Rising capex costs pose risks, but AI adoption and new deals support investor sentiment.

Oppenheimer upgraded Oracle to Outperform with a $185 target, citing a sharp 2026 selloff that created an attractive entry point. Analyst Brian Schwartz expects strong EPS growth through FY30, supported by AI and cloud wins like OpenAI and TikTok. Risks remain from margins, financing, and execution, but downside appears increasingly protected.

Sea’s recent share weakness sparked AI concerns, but Bernstein says fears are overstated. The company uses OpenAI and Google partnerships rather than heavy in-house AI, integrating agentic shopping across Shopee. Its full-stack e-commerce and fintech infrastructure make displacement difficult. Bernstein maintains an outperform rating, citing limited emerging-market AI impact.

UBS upgraded IBM to Neutral from Sell, citing a more balanced risk/reward after a 22% 2026 decline. The shares trade at 18.5 times 2026 earnings, with expected 3–4% organic revenue growth. UBS highlighted Red Hat slowdown, AI impact on consulting and infrastructure, but noted Z mainframe resilience, guiding 2026 free cash flow at $15.7 billion.

Jefferies upgraded Enphase Energy to Buy from Hold, raising its price target to $57, citing stronger demand visibility and margin expansion after a 2026 volume trough. Confidence in power purchase loans, rollout of IQ9 inverters, and IQ10C battery growth support higher volumes and margins, with 2028 EBITDA now forecast 14% above consensus.

Baird downgraded First Solar to Neutral, citing a weaker 2026 outlook and policy uncertainty. Q4 revenue beat estimates at $1.68 billion, with earnings roughly in line, and gross margin improved to 39.5%. For 2026, revenue and adjusted EBITDA guidance fell short of expectations, while international capacity constraints and tariff concerns add near-term margin pressure.

Upcoming data and events

Today's key economic data include US jobless claims and mortgage rates. Major earnings are expected from Rolls-Royce, Intuit, Deutsche Telekom, Allianz, AXA, and Schneider Electric.

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