A paradoxical situation has developed in the U.S. stock market: NVIDIA, the flagship of the artificial intelligence industry, reported results that surpassed the boldest analyst expectations, yet the broader market reacted more than modestly. The S&P 500 index ended the trading session nearly flat, settling at 7,675.70 points. Investors appear to be in a wait-and-see mode, assessing not so much the strength of corporate reports as the overall macroeconomic picture.
Inflation Offers No Cause for Optimism
The key restraining factor was fresh U.S. inflation data. The core Personal Consumption Expenditures (PCE) price index, which the Federal Reserve closely monitors, showed a 0.2% month-over-month increase in July and a 3.3% year-over-year rise. These figures fully matched the consensus forecast. However, the headline PCE reading came in 0.1 percentage points above expectations, reaching 3.7% on an annual basis. For the market, this means only one thing: the Fed still has no reason to ease monetary policy, and therefore no triggers for a confident rally are emerging.
NVIDIA Shares: Surge After the Close
NVIDIA's report itself is undoubtedly impressive. The company's quarterly revenue reached $96.2 billion, up 106% from a year earlier and significantly exceeding forecasts of around $92 billion. Earnings per share came in at $2.22 versus the expected $2.09, while gross margin held at an impressive 75%. The AI cloud and enterprise solutions division brought in $40.3 billion, showing growth of 138%. CEO Jensen Huang stated that AI has "passed the inflection point" and is now generating real revenue.
Nevertheless, during the regular session, NVIDIA shares closed down 1.59% at $209.66. Only after the report's release, in after-hours trading, did the stock recover its losses and surge 4.32% to $218.72. This is a classic sign that the market had priced in even more outstanding results, and the company's current valuation leaves no room for error.
My view on the situation: we are witnessing a fundamental shift in market psychology. Investors are no longer willing to pay for promises, even from a giant like NVIDIA. Every report is now evaluated through the lens of inflated expectations, and for further stock growth, not just good but extraordinary results are required. In the near term, the key catalyst could be the Fed Chair's speech in Jackson Hole, which has the potential to set the tone for the entire market through the end of the year.