Wall Street futures declined in early Thursday trading after Nvidia reported mixed results. Nasdaq futures fell over 100 points while S&P 500 futures dropped 25 points. Despite benchmark indices gaining for a second consecutive day on Wednesday, with the Dow Jones up nearly 300 points over two sessions, market sentiment remains cautious.

Nvidia's Q2 Earnings Results

Nvidia reported second quarter revenue of $13.51 billion, exceeding the $11.22 billion estimate, with earnings per share of $2.70 beating the $2.09 expectation. Despite the earnings beat, shares fell 3.10% in extended trading. The company guided for $16.00 billion revenue in the current quarter, above analyst projections of $12.61 billion.

Nvidia's guidance projects a 10th straight quarter of 50%-plus revenue growth, but it would be the slowest in these 10 quarters if achieved. The data center business, now the largest revenue source, generated $10.32 billion, surpassing the $7.69 billion estimate. Gaming revenue reached $2.49 billion, exceeding the $2.40 billion estimate.

Economic Data and Market Focus

Thursday's session will feature multiple data releases including:

• Q2 GDP revision
• Initial jobless claims
• Pending home sales data

Fed Governor Christopher Waller is scheduled to speak. Friday brings the Personal Consumption Expenditure inflation figures, with core PCE estimated to rise 2.90% year-on-year in July.

Oil prices declined in early Asia trading, while short-dated Treasuries climbed amid Federal Reserve policy easing expectations. The US Dollar index remains above 98.00.

Asian Market Response

Asian technology shares advanced as investors eagerly anticipated Nvidia's earnings report. The Asian tech sector saw a 0.60% increase, outperforming broader regional markets that remained relatively flat. Notable movements include:

• Chinese AI company Cambricon Technologies jumped 8.20% to reach record highs after reporting record profits.
• In Japan, Nikon shares surged 21.00%.

Currency Movements

The Chinese yuan strengthened to its highest level against the dollar since November, indicating positive sentiment in the Chinese market. However, investors remain cautious as they focus on key risks, including the implications of Nvidia's earnings report and upcoming inflation data.

Political and Trade Developments

Two significant developments are capturing market attention:

1. President Trump's move to dismiss Federal Reserve Governor Lisa Cook has raised concerns about the independence of the Federal Reserve.

2. The United States is set to impose 50.00% tariffs on select Indian goods. These tariffs, the highest in Asia, are being implemented as a response to India's purchases of Russian oil.

As markets digest these various factors, including Nvidia's mixed earnings report, investors will be closely watching for potential impacts on the tech sector performance and broader market sentiment.

The S&P 500 experienced its best day since May, breaking a five-session losing streak, following Federal Reserve Chair Jerome Powell's indication of potential interest rate cuts. This market surge sets the stage for Nvidia's highly anticipated quarterly earnings report, scheduled for release after market close on Wednesday.

Nvidia's Crucial Earnings Report and Valuation

Nvidia, now the largest component of the S&P 500 with nearly an 8% weighting, is poised to play a pivotal role in validating the ongoing AI-driven market rally. The company's performance has significant implications for broader market trends, given its substantial influence on the index.

Nvidia's market valuation has reached $4.30 trillion, potentially surpassing India's Rs 5.21 trillion equity market if it reaches Cantor Fitzgerald's new price target of $240.00. The AI chip leader has doubled in value over the past 16 months and became the first company to cross the $4 trillion market cap threshold.

Wall Street Expectations and Analyst Targets

Analysts on Wall Street have set high expectations for Nvidia's fiscal second quarter results:

These projections represent a 48% year-over-year increase in adjusted earnings per share and a 54% year-over-year increase in revenue.

Multiple brokerages have raised their price targets for Nvidia:

• Cantor Fitzgerald increased from $200.00 to $240.00
• Wedbush, KeyBanc, UBS, Morgan Stanley, and Susquehanna have also raised their targets
• Nearly 90% of analysts rate Nvidia as a buy-equivalent

Tech Giants' Impact and Market Performance

Nvidia's close ties with major tech companies underscore its importance in the AI and tech sectors. The company generates 40% of its revenue from four key clients:

• Meta
• Microsoft
• Alphabet
• Amazon

Nvidia shares have gained over 30% this year and an impressive 1,400% since October 2022. The stock now represents close to 8% of the S&P 500.

Market Reactions and Expectations

• Options traders are pricing in a potential 6% move in either direction following the earnings announcement.
• Nvidia shares rose 1.70% on Friday, ending a three-day decline.
• The stock is currently trading within 3% of its recent record highs.

Broader Market Context

The upcoming earnings report comes at a crucial time for both Nvidia and the broader market:

• The S&P 500's recent rally was fueled by optimism surrounding potential interest rate cuts.
• As a leading indicator of AI-related market trends, Nvidia's performance could have far-reaching effects on investor sentiment and market direction.

Investors and analysts alike will be closely watching Nvidia's results, as they could provide valuable insights into the sustainability of the AI-driven market rally and offer clues about the tech sector's overall health.