Nvidia Guidance Eases Concerns: 8 Key Items Shaping the Stock Market Thursday

These are the early headlines and other items poised to influence the market at the start of the trading day. As we share this collection of market drivers, U.S. equity futures point to a mixed market open later this morning.

1. Qatar’s prime minister will visit Tehran on Thursday in a bid to relaunch diplomacy after the U.S. and Iran traded recriminations over Washington’s promise to increase economic pressure on ‌Tehran by targeting its trade partners for sanctions. A Gulf neighbour of Iran and a U.S. ally, Qatar has served as a back-channel negotiator for the warring parties and played a direct role in securing the June ceasefire that briefly led to a cessation of hostilities. (Reuters)

Candidly, with the war approaching its sixth month and little signs of breakthrough on peace talks between the U.S. and Iran, the odds of a Qatar moving the needle, in our opinion, are rather low. We reiterate our focus on tracking volumes through the Strait, but we’ll also share that, should we see peace talk progress, we have to wonder how quickly the market will consider a full re-opening of the Strait. Given the “show me” nature of where we are, that likely means the decline in oil prices following some peace agreement probably won’t be an immediate one. Hopefully, when the time comes, we’re wrong on that.

2. Nvidia’s stock rose Thursday on the company posting a set of expectation-beating second-quarter results. And analysts say there’s more of where that came from… Nvidia could deliver upside to its current guidance for fiscal year 2028 — which it said was for revenue growth of 70%, far surpassing analysts’ expectations of 45% — if it continues to work with technology companies on the build-out of data centers to help close the gap between demand from customers and supply… the company’s forecast of gross margin of 72% to 73% in fiscal year 2028 is likely to put investors’ worries over high spending costs at ease. (MarketWatch)

To begin with, Nvidia’s (NVDA) fiscal 2028 discussed above matches with calendar 2027, so the company’s guidance calls for 70% growth next year on top of the more than 80% revenue growth forecasted for the current one. At the heart of this is rising AI adoption and expanding usage, which as CEO Jensen Huang pointed to during Wednesday night’s earnings call is “driving an acceleration in demand…”

But to us, it was the full comment made during the earnings call about Nvidia’s revenue prospects next year that really stood out to us — “we expect to grow approximately 70% as we are supply constrained.” That tells us the rising tide of AI adoption and usage will continue to lift multiple AI chip boats. It also sets up what should be a favorable quarterly report and conference call tonight from Marvell (MRVL) and before too long Broadcom (AVGO). We also see Nvidia’s outlook for calendar 2027 supporting demand for other companies in the AI infrastructure complex, from networking to power.

One last quick thing to share, heading into Wednesday night’s earnings report, the short interest was around 286 million shares, which would take about 2.5 days to cover. That is going to help pop NVDA shares on Thursday. We’ll have more to say in a detailed note later on Thursday from Nvidia.

3. HP Inc. shares fell after investors looked past a widely expected boost in the company’s profit forecast and worried about future demand for computers and printers… HP has been managing through an unprecedented jump in memory chip costs that has pushed it to raise prices for many of its PCs and redesign others. Investors had already expected a “better-than-feared July quarter,” and are now concerned about worsening trends in the PC and printer markets… While PC unit revenue increased 18% in the fiscal third quarter, unit shipments dropped 16%, as sales were boosted by price increases even as demand for machines is hurt by the sticker shock. (Bloomberg)

We’re placing this item about HP (HPQ) right after the revelation that Nvidia will be supply constrained through next year to hammer home the demand for additional chip capacity. That plays into our thesis for the Portfolio’s position in Applied Materials (AMAT), and as you know the pronounced pullback in the AMAT shares isn’t lost on us. We’ll also add that fall in PC unit shipments by HP reaffirms our concern about Qualcomm’s (QCOM) strategic shift into that market as its Apple (AAPL) business trails off in the next several months. It also gives us pause on other chip companies with meaningful exposure to the PC sector.

4. Salesforce lifted its annual revenue and profit forecasts on Wednesday and rolled out a new plug-in combining its capabilities with Anthropic’s Claude AI models, ‌sending its shares up 14% in extended trading. (Reuters)

The company expects revenue to accelerate in the second half of the year, even without the impact of acquisitions, Chief Financial and Operating Officer Robin Washington said in the statement. Net orders are at the strongest they’ve been in four years, she said. (Bloomberg)

On Wednesday, Intuit (INTU) raised concerns over aggressive pricing to win AI business, but in addition to posting double-digit gains in current remaining performance obligations (cPRO) and remaining performance obligations (RPO), Salesforce’s (CRM) guidance calls for margins to be stable. That suggests the aggressive moves telegraphed by Intuit are more likely a company specific problem but it also means keeping an eye on margins at Salesforce and others as they guide for calendar 2027.

Baked into Salesforce’s consensus-topping revenue guidance are the expected closure of two acquisitions in the current quarter. Not exactly a clean beat and raise in our view, and we would prefer to see guidance for the existing business with the contribution from those acquisitions layered on top. Still, in the headline-driven market we are in, that better than expected top-line guidance and call for steady margins will lead to some short-covering. Per NYSE data, 26.5 million shares were short equating to 3.59 days to cover.

The read through from Salesforce’s results and guidance to the Portfolio is that AI adoption and usage are growing, and that bodes well not only for our AI infrastructure holdings but for Palantir (PLTR) and others as well.

5. Shares of CrowdStrike Holdings were roaring after the cybersecurity company revealed a record-breaking quarter, one partially boosted by fears about the power of artificial intelligence… The company reported fiscal second-quarter total revenue of $1.47 billion, up 26% compared to a year earlier. Annual recurring revenue, a metric that helps companies show the income they expect to receive from customers, grew 25% from a year before to $5.84 billion as of July 31. Wall Street had expected weaker growth on both metrics, according to FactSet data. (MarketWatch)

All in all, a very strong report and one that confirms why we own the First Trust Nasdaq Cybersecurity ETF (CIBR) in the Portfolio, which counts CrowdStrike (CRWD) as its third-largest position behind Palo Alto Networks (PANW) and Fortinet (FTNT). Together, those three account for about 25% of the underlying basket.

As we think about the long-term prospects for cybersecurity demand, CrowdStrike CEO George Kurtz summed it pretty well when he said that, “Every enterprise will run on AI, and securing it is the largest market opportunity in our history.”

That suggests we will soon have to break out our CIBR spreadsheet and revisit our price target, and that’s just fine with us.

6. Markets have signaled to Federal Reserve Chairman Kevin Warsh that they want more explicit guidance about how the U.S. central bank intends to restore price stability. If Warsh can’t supply answers on Friday in his keynote address at the Fed’s annual symposium in Jackson Hole, Wyo., his credibility may fall victim to a crisis of his own making. (Barron’s)

A quick reminder that even though we’ve cleared the Nvidia earnings bar, the market will be waiting to hear what the new Fed Chair has to say on Friday starting at 10 a.m. ET. If Warsh declines again to provide details about what indicators and near-term conditions he is weighing to consider rate policy, we could see the market less willing to give Warsh the benefit of the doubt. To be clear, we do not expect Warsh to give guidance, but discussing a policy framework may soothe the market given the sticky inflation data contained in Wednesday’s July PCE Price Index.

7. Economic data today per TipRanks: Initial & Continuing Jobless Claims (Weekly), EIA Natural Gas Inventories (Weekly).

8. Companies reporting today per TipRanks: AM – Best Buy (BBY), Burlington Stores (BURL), Canadian Solar (CSIQ), Dollar General (DG), Dollar Tree (DLTR), Hormel Foods (HRL). PM – Affirm (AFRM), Autodesk (ADSK), Elastic (ESTC), Gap (GPS), Marvell (MRVL), SentinelOne (S), Ulta Beauty (ULTA), Workday (WDAY).