Nvidia’s record quarter fails to impress as Wall St slides
Vista earnings loom as Paramount and Netflix continue their deal dance with WBD.
Stocks on Wall Street were back in the red after Nvidia’s record quarterly sales failed to impress investors wanting more reassurance that the pace of spending on artificial intelligence infrastructure will be maintained, weighing on the likes of the other Magnificent 7 megacap companies and chipmakers such as Advanced Micro Devices and Broadcom.
Brent crude oil prices rose as nuclear talks between the US and Iran get to the pointy end of negotiations, with envoys Steve Witkoff and Jared Kushner telling the Middle Eastern nation it needs to destroy its three main nuclear sites and hand over its remaining enriched uranium.
Vista Group International is among those reporting today coming after a mixed box office experience from Warner Bros Discovery and Paramount Skydance, which are continuing their deal dalliance with Netflix.
Meanwhile, Australian futures are pointing to a soft day in the antipodes with the S&P/NZX 50 index poised to deliver a positive month with a clutch of earnings from the likes Summerset Group Holdings, Port of Tauranga and Channel Infrastructure.
That don’t impress me much
Stocks on Wall Street were led lower by the tech-heavy Nasdaq Composite, which was down 1.8% in late trading, with the megacap Mag7 companies broadly weaker and chipmakers AMD and Broadcom knocked as Nvidia’s record sales and strong forecasts failed to inspire investors’ confidence that the pace of spending by hyperscalers on AI infrastructure will persist as returns remain elusive.
“After the bell yesterday, Nvidia produced another blockbuster quarterly earnings report, with revenue and profit beating expectations and with stronger than expected guidance on future revenue, but that hasn’t been enough to calm fears about the future of AI-related stocks,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “What’s good for Nvidia, is bad for its customers, as the company’s massive cashflow is sucked away from them.”
Software giant Salesforce gained 3.3% in late trading after reporting a better-than-expected quarter, and calming fears that the software-as-a-service leader will have its business model upended by AI.
Earnings after the bell by Dell, Intuit and CoreWeave will provide more clues into the impact of AI.
Paramount rallied after reporting growth in its in streaming business, while Warner Bros Discovery was flat after posting declining revenue across all its businesses. WBD remains a live play with Paramount’s latest offer likely to force Netflix to improve its bid for the media group.
Nuclear option
That broad risk aversion among investors remained elevated as the US expanded its military presence in the Middle East as it steps up demands on Iran to rein in its nuclear ambitions, with special envoys Steve Witkoff and Jared Kushner telling Iran it must destroy its nuclear sites in Fordow, Natanz and Isfahan and hand over its enriched uranium.
Brent crude oil futures climbed 1.9% to US$72.02 a barrel at 7am in Auckland, while the volatility index, known as Wall Street’s fear gauge, jumped 12% to 20.02.
Across the Atlantic, stock markets were stronger with the UK’s FTSE 100 index up 0.4% with a 9.1% gain for the London Stock Exchange Group among the leaders on its own bourse on plans to buyback about US$4 billion of stock in the next year. Germany’s DAX gained 0.5% with Deutsche Boerse leading it higher, while France’s CAC 40 increased 0.7%.
That downbeat tone is set to carry through the antipodes with Australian futures pointing to a 0.3% decline for the S&P/ASX 200 index when trading opens across the Tasman. New Zealand’s NZX50 is on track to post a 1.8% gain this month, in its strongest monthly performance since October.
Local earnings today include Vista, which has shed 34% so far this year amid heightened fears about the impact of AI on SaaS companies. That also comes after Paramount and WBD’s respective results showed different fortunes for their media giants’ studios businesses.
Summerset is also due to report, with analysts predicting a 17% increase in annual earnings. ASB Bank’s latest housing confidence survey showed a net 30% of respondents expect house prices to rise in the coming year, up from 17% in the prior quarter.
Other companies scheduled to report today include Channel Infrastructure, Port of Tauranga, Delegat and T&G Global, while local data include ANZ’s consumer confidence survey.
Reporting by Paul McBeth. Image from David Vives on Unsplash.
