Wall Street Holds Near Records as Nvidia Earnings Keep AI Trade Alive

The S&P 500 flirted with new record highs Thursday, as investors weighed fresh earnings from Nvidia, the $4 trillion chip giant at the center of the AI boom.

The broad index briefly hit an intraday high before leveling off, while the Nasdaq Composite climbed 0.4%. The Dow Jones Industrial Average lagged, slipping 92 points, or 0.2%.

Nvidia posted another monster quarter with revenue up 56% year-over-year. Sales hit $46.7 billion, slightly ahead of expectations, while profits topped Wall Street’s estimates.

But two points gave traders pause:

• Data center revenue, the crown jewel of Nvidia’s AI business, came in a touch lighter than forecast.
• The company guided $54 billion in Q3 revenue, just above analyst expectations of $53.1 billion.

Crucially, the forecast doesn’t include any chip sales to China, after Washington’s export restrictions left Nvidia’s H20 processors stuck in limbo. CEO Jensen Huang told investors that if a US–China deal comes through, sales could be far stronger.

“They didn’t include China in their guide, and some people were hoping there were,” Ben Reitzes of Melius Research told CNBC. “The core growth outside China was really good… I think we’re all systems go.”

Shares of Nvidia whipsawed but settled about 1% lower. Several big banks, including JPMorgan, Citi, and Bernstein, raised their price targets anyway, signaling Wall Street still sees more upside.

Nvidia’s results sent ripples through the chip sector:

• Broadcom rose 2%.
• Micron Technology gained 3%.
• Snowflake, another AI favorite, spiked 18% after posting better-than-expected revenue.

David Wagner of Aptus Capital Advisors brushed off Nvidia’s dip as noise:

“The company is still growing over 50% on their guidance at a $50B quarterly run rate – that’s remarkable. Investors should be buying the pullback.”

Beyond Nvidia, markets were digesting political and economic crosscurrents:

• Traders largely shrugged off President Trump’s controversial attempt to fire Fed Governor Lisa Cook, which has since sparked a lawsuit.
• Weekly jobless claims ticked lower, suggesting a still-sturdy labor market.
• The market’s next big test: Friday’s inflation report, where economists expect the Fed’s preferred gauge (PCE) to show a 0.2% monthly increase and 2.6% year-over-year rise.

Rate cut hopes remain strong: traders are pricing in an 84% chance of a September cut, per LSEG data.

The AI story is still driving Wall Street, and Nvidia remains its poster child. While questions about China sales linger, the company’s growth machine is intact. For now, the S&P 500 is riding that wave—hovering near records with the next move hinging on inflation data and Washington-Beijing trade talks.

CNBC, Bloomberg, and Reuters contributed to this report.