U.S. stock futures traded in a mixed fashion Thursday, with Nvidia’s results weighing on the tech sector. Tesla’s sales in Europe continued to slump in July, while doubts have emerged about the trade deal between Japan and the U.S. after Tokyo’s main negotiator cancels a trip to Washington.
1. Nvidia retreats amid China uncertainty Nvidia (NASDAQ:NVDA) delivered strong quarterly results after the market close Wednesday, with the chip designer and AI bellwether reporting a beat to analysts’ estimates and forecasting third-quarter revenue that was higher than Wall Street estimates.
However, a miss on data centre revenue and questions over China forecasts caused investors to question the company’s elevated valuation, resulting in its shares sliding in after-hours trading.
The stock dip removed around $110 billion from Nvidia’s $4.4 trillion market capitalization.
Nvidia’s second-quarter earnings – $1.04 per share– beat expectations of $1.01, as did revenue, at $46.7 billion, while it forecast current quarter revenue of $54 billion, plus or minus 2%, which is higher than expectations of $52.76 billion.
But Nvidia’s data center revenue, which is by far its biggest breadwinner, came in at $41.1 billion, missing estimates of $41.34 billion. The miss largely stemmed from Nvidia selling no H20 chips in China during the quarter.
CEO Jensen Huang expects permission to restart selling Nvidia’s chips to China after striking a deal with U.S. President Donald Trump to pay commissions to the U.S. government. But with no formal U.S. rules in place and questions about whether Chinese regulators will discourage purchases of Nvidia chips, the AI market bellwether excluded potential China sales from the forecast for the current quarter.
Nvidia CFO Colette Kress said the company will ship between $2 billion and $5 billion in H20 revenue in the current quarter, if geopolitical issues were to subside. But the outlook on China still remained highly uncertain.
2. U.S. futures mixed; Nvidia weighs on tech sector U.S. stock futures traded in a mixed fashion Thursday, with the tech-heavy Nasdaq underperforming after the release of results from AI darling Nvidia.
At 02:55 ET (06:55 GMT), the S&P 500 futures traded 2 points, or 0.1%, higher and Dow futures rose 127 points, or 0.3%, while Nasdaq 100 futures dropped 17 points, or 0.1%.
The major indices enjoyed a winning session Wednesday, with the broad-based S&P 500 hitting a record close. They are on pace to record monthly gains, as the S&P 500 and the NASDAQ Composite are each up more than 2%, while the 30-stock Dow Jones Industrial Average is up more than 3% in the period.
Aside from Nvidia’s results, investors will also digest numbers from the likes of Snowflake (NYSE:SNOW) and NetApp (NASDAQ:NTAP), while the economic data calendar includes the release of weekly initial jobless claims and gross domestic product growth for the second quarter.
3. Tesla suffers 40% drop in European sales in July Tesla’s (NASDAQ:TSLA) sales and market share in Europe fell sharply in July, data from the European Automobile Manufacturers’ Association showed on Thursday, even as broader electric vehicle sales in the region continued to increase.
