Nvidia’s strong earnings and optimistic outlook on AI chip demand have sparked a global rally in tech stocks, boosting chipmakers and cloud companies despite some cautious investor reactions in cybersecurity. Meanwhile, the market awaits the delayed September jobs report for clues on Federal Reserve policy, balancing AI-driven growth optimism with ongoing economic, geopolitical, and consumer concerns.
The Bloomberg Brief opens with a focus on Nvidia’s strong earnings report and optimistic outlook, which has sparked a global rally in tech stocks. Nvidia’s CEO Jensen Huang highlighted that demand for their Blackwell chips is “off the charts,” with plenty of supply to meet this demand, particularly from major hyperscalers like Google, Meta, and Amazon. This upbeat forecast has lifted not only Nvidia shares by over 5% but also boosted other chipmakers such as AMD, Broadcom, and Intel. Cloud computing companies like CoreWeave and Oracle also saw gains, reflecting the broader enthusiasm around AI and cloud infrastructure investments.
Despite Nvidia’s positive momentum, some tech stocks like Palo Alto Networks faced declines, dropping over 4% despite beating earnings expectations. The cybersecurity firm announced a significant acquisition to expand its AI-enabled cybersecurity offerings, but investors appeared cautious about the price paid. Meanwhile, the broader market is digesting the delayed September jobs report, the last major labor data before the Federal Reserve’s December meeting. Market participants are closely watching this report for clues on the Fed’s next moves, with current pricing indicating less than a 30% chance of a rate cut in December.
Analysts from Bloomberg Intelligence and Truist provided insights into Nvidia’s performance and the labor market outlook. They noted that Nvidia’s margins are strong but may face some pressure over the next two years due to rising component costs. The company’s growth is driven by both hyperscalers and expanding enterprise and sovereign AI customers, with a forecast of data center revenues reaching $350 billion next year. However, geopolitical uncertainties, particularly regarding sales to China, remain a concern, although the Chinese market now represents a smaller portion of Nvidia’s revenue due to local competition and government policies encouraging domestic alternatives.
The labor market discussion highlighted that while the September jobs report is expected to show solid job additions, the Federal Reserve is likely to maintain its current interest rates for now. Alternative labor market data suggests a gradual improvement but not a full cooling yet, with some risks around future data momentum and infrastructure constraints like power supply for data centers. Market experts emphasized that the tech sector, especially AI-related stocks, remains the key growth driver despite macroeconomic uncertainties and potential government shutdown risks.
Other notable news included President Trump signing a bill mandating the release of Jeffrey Epstein investigation files within 30 days, a move that reverses his previous stance and could have political implications. Additionally, TikTok parent company ByteDance saw its valuation soar to $480 billion following a significant Chinese investment, signaling strong interest in the company. Walmart’s upcoming earnings report is also highly anticipated as a barometer for consumer strength heading into the holiday season, with expectations of strong sales growth despite broader concerns about consumer confidence and inflation pressures. Overall, the market is cautiously optimistic, balancing AI-driven growth with ongoing economic and geopolitical challenges.