Dow Jones Industrial Average futures were roughly flat in after-hours trading, while S&P 500 futures, and especially Nasdaq futures, were lower. NVIDIA (NVDA) beat expectations, leading to a rise in its stock price and was sold off overnight despite announcing a $50 billion share buyback.
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Nasdaq sees selling ahead of Nvidia earnings report; Palantir, TDG, Evercore hold up
Other AI-related stocks include Broadcom (AVGO), NVIDIA chipmaker Taiwan Semiconductor Manufacturing (TSMC), Advanced Micro Devices (Am), Arista Networks (Annette) retreated slightly.
meanwhile, Salesforce (Customer Relationship Management), Crowdstrike (CRWD) and Octa (Octa) topped all views and storage plays on Wednesday night NetApp (NTAP), Pure Storage (Prestige) and Nutanix (NTNX). But stock prices diverged.
The stock market fell on Wednesday ahead of Nvidia’s earnings report but recovered well from the intraday lows. NVDA shares fell along with most AI stocks, but also significantly pared losses.
Nvidia’s stock price IBD LeaderboardNVIDIA, Arista and Pure Storage stock prices IBD50Arista’s stock price IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures rose slightly relative to fair value, due in part to Salesforce shares becoming a component of the Dow. S&P 500 futures fell 0.65%. Nasdaq 100 futures fell 1.1%. NVDA shares are a major player in the S&P 500 and Nasdaq 100, with Broadcom, AMD and Arista also noteworthy, and many other tech giants also moving into Nvidia’s earnings.
Remember that overnight movements in Dow futures or any other stocks do not necessarily translate into actual trading in the next regular stock market session.
IBD experts break down major stocks and markets on IBD Live.
Stock market rise
Gains in stocks were reversed on Wednesday as technology stocks led the decline ahead of earnings reports from Supermicro and Nvidia.
The Dow Jones Industrial Average fell 0.4% on Wednesday’s stock market. The S&P 500 Index fell 0.6%, with SMCI stock by far the worst performer. The Nasdaq Composite Index fell 1.1%. The small-cap Russell 2000 fell 0.65%.
The Nasdaq closed below its 50-day line and briefly dipped below its 21-day line, while the Dow Jones Industrial Average and the S&P 500 fell more slowly, staying above key levels and near all-time highs.
Nvidia Partners Super Microcomputer (SMCI) plunged 19%, nearly reversing a big gain earlier this year. The AI server maker postponed its 10-K filing with the SEC a day after a short-seller report accused Supermicro of questionable accounting practices.
Foot Locker (Florida), Abercrombie & Fitch (National Library of Australia) and Lee Auto (Lee) were among the companies that suffered large declines in profits. Neurosecretory Bioscience (NBIX) shares plummeted after the company’s experimental schizophrenia drug lagged behind rival treatments.
U.S. crude oil prices fell 1.3% to $74.52 a barrel. The yield on the 10-year Treasury note rose 1 basis point to 3.84%.
ETF
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) fell 1.2%, with Salesforce shares being a big holding. The VanEck Vectors Semiconductor ETF (SMH) fell 1.7%. Nvidia shares were the top performers on the SMH, with Taiwan Semiconductor, Broadcom and AMD also in the spotlight.
Reflecting more speculative story stocks, the ARK Innovation ETF (arc) fell 2.5%, while the ARK Genomics ETF (arc) fell 1.6%.
SPDR S&P Metals & Mining ETF (XME) fell 1.9%. The SPDR S&P Homebuilders ETF (translation) fell 0.7%.XL) fell 0.6%, while the Health Care Select Sector SPDR Fund (Chapter 45) rose 0.1%.
Industrial Select Sector SPDR Fund (Article 41) fell slightly. The Financial Select SPDR ETF (XLF) rose 0.25%.
Timing the Market with IBD’s ETF Market Strategy
NVIDIA Revenues
Nvidia posted triple-digit profit and revenue growth for the fifth consecutive quarter, but the better-than-expected gains were relatively modest compared with the company’s phenomenal performance in previous quarters.
The AI chip giant forecast third-quarter revenue to be slightly above consensus estimates.
Nvidia also announced a $50 billion share buyback program, with the semiconductor giant having $7.5 billion remaining in its existing authorization.
Amid reports that the launch of Blackwell processors will be delayed, Nvidia CEO Jensen Huang said on an earnings call that volume shipments of its next-generation AI chips will begin in the fourth quarter.
Investors will want confirmation on delays to Blackwell’s next-generation AI chips and whether customers are focused on the current generation of AI chips.
Nvidia Stock and Other AI Hardware Stocks
Nvidia shares fell sharply overnight, signaling a move below its 50-day moving average. Shares fell 2.1% to 125.61 in Wednesday trading after dropping below recent lows intraday. A move above this range would allow for early entry into the sub-handle. The official buy point for Nvidia shares is 140.76, with 136.15 also providing an early entry point.
Broadcom, Taiwan Semiconductor and AMD shares fell sharply, with Arista also falling slightly. All stocks except AMD were relatively close to buying opportunities.
Inside Nvidia’s AI Competitive Edge
Other Revenues
Salesforce.com Inc.’s profit beat expectations and the software giant gave a slightly mixed outlook. CRM shares were up slightly in late trading. The stock was down 2% to close just below its 200-day line.
CrowdStrike’s earnings beat expectations, but the cybersecurity giant saw its stock price fall after it caused a global outage on July 18. CrowdStrike shares initially rose but then fell sharply in overnight trading. The stock has rebounded from its lows on August 5 but remains well below its 50-day and 200-day moving averages.
Okta’s revenue slightly beat expectations for the second quarter. Okta shares have been trading lower for a long time. The stock price was down 0.45% to 96.54 on Wednesday. A buy point for Okta is 114.50, but I would expect a clear move above 100 as an early entry.
NetApp’s profit beat expectations and revenue was slightly above consensus. NTAP shares fell sharply overnight. The data storage giant was down 0.9% to 131.91 on Wednesday. NetApp shares are in a V-shaped consolidation with a buy point of 134.37.
Pure Storage earnings hit new record high. PSTG shares fell sharply in extended trading after recently hitting resistance at its 50-day line. Shares fell 2.2% to 59.76 on Wednesday. A decisive break above the 50-day line would also push the stock above short-term highs and trendlines, allowing for early entry into the storage business. Pure Storage shares have an official buy point of 70.41.
Nutanix’s profits beat expectations for the fourth quarter. NTNX shares surged in after-hours trading. The stock was down 1.7% on Wednesday, hovering between its 200-day and 50-day lines after a steep drop following its third-quarter earnings report.
What to do now
The stock price gains paused or retreated ahead of Nvidia’s earnings release.
Investors may need to get active on Thursday and add or reduce exposure depending on how Nvidia, Salesforce and others react, so have your watchlists and exit strategies ready.
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