11:45am: Concerns surrounding Salesforce
Salesforce’s latest guidance shows only modest revenue growth, leading to worries about a slowdown in corporate tech spending and rising competition in AI.
“Investors are looking closely at Salesforce’s outlook for 2027, which fell slightly short of expectations with just mid-single-digit sales growth,” noted Ipek Ozkardeskaya, a senior analyst at Swissquote.
“This has led many traders to view it as an indication that growth may lag in the near term, particularly with concerns about decreasing corporate technology investments and the AI competition heating up.”
Even so, Salesforce’s stock saw a rebound Thursday morning, rising about 2.4% as midday approached.
10:45am: NVIDIA’s “Gold Medal Performance”
Dan Ives from Wedbush remarked that Nvidia’s results offer tech investors everything they hoped for, wrapped up nicely.
Ives’ optimism holds, even though China’s revenue hasn’t significantly materialized since the late 2000s. He foresees further gains as geopolitical tensions relax.
He commended CEO Jensen Huang for addressing worries about AI software disruptions, pointing out that major players like Microsoft and ServiceNow are central to the AI evolution. “The software layer will essentially be the backbone of AI for years to come,” he said, suggesting current market expectations might not fully capture the monetization potential in this field.
Wedbush anticipates that Nvidia will continue to lead the $4 trillion AI infrastructure market and predicts a market cap of $6 trillion by 2027. Ives also mentioned significant capital expenditure plans from Amazon, Meta, and Alphabet as signs that AI investments are ramping up. He compared Nvidia’s achievements to a young Michael Jordan, suggesting this “gold medal performance” is just the start of an AI-driven transformation in tech.
9:52 a.m.: Mixed start as Dow rises but Nasdaq falls
Wall Street had a mixed opening.
The Dow Jones Industrial Average increased by 0.4%, while the S&P 500 dropped 0.3%, and the Nasdaq fell around 0.8%.
Nvidia’s stock slipped about 2.3%.
Among the biggest losers on the Nasdaq 100 were Synopsys and Broadcom, both down over 3%, with AMD, Seagate, Western Digital, and Micron also declining by roughly 2%.
On the upside, United Health and American Express were the leading gainers in the Dow, along with a resurgence from Salesforce after its prior after-hours decline.
8am: Nasdaq and Dow futures flat pre-opening
U.S. stock futures were heading for a flat start Thursday morning as Nvidia and Salesforce digested after-hours earnings.
Futures for the Nasdaq and Dow Jones were mostly flat, with slight declines below 0.05%, while S&P 500 futures showed modest gains.
Nvidia shares, which had stabilized after a robust earnings report, gained 1.5% in pre-market trading.
As demand for AI chips soars, Nvidia exceeded Wall Street’s expectations, reporting a 73% year-over-year revenue increase in the fourth quarter, totaling $68.13 billion, with adjusted EPS at $1.62, up 82%, surpassing an estimate of $1.50. This marks Nvidia’s 16th positive quarter out of the last 17.
The company noted that AI adoption is accelerating rapidly, indicating that computing demand is “growing exponentially at an inflection point for agent AI.”
Looking ahead, Nvidia anticipates about $78 billion in revenue for the first quarter, compared to analysts’ forecasts of $72.78 billion, assuming no revenues from China’s data center market, and has $58.5 billion left in its stock repurchase program.
Kate Lehman, chief market analyst at Avatrade, described the results as a “green light for tech risk appetite,” possibly boosting semiconductor, software, and AI-related activities, validating the multi-year capital expenditure wave.
However, although shares initially spiked by 4% post-earnings, they have since cooled.
“Why? Well, it’s not about whether Nvidia performed well; it did,” said Kenny Porcari from Slatestone Wealth.
“This boils down to expectations. The market is looking for certainty, reassurance that the AI capital expenditure boom will continue, and that nothing will falter. That seems a bit much.”
“These are companies that have grown their revenues by over 70% while scaling, and it’s disappointing they didn’t exceed even greater expectations.”
“When stocks stand as proxies for an industrial revolution, the bar shifts from ‘beat’ to ‘do it again, but better.’”
On another note, while Salesforce reported quarterly results that beat expectations, its sales still dropped by 3% after offering a slightly muted sales forecast.
Subscription revenue grew by 13%, the adjusted operating margin slightly exceeded expectations, free cash flow rose by 39%, and a $50 billion share buyback and dividend increase were also announced.
Porcari remarked that the narrative here circles back to the ongoing fear of AI’s potential impact.
“If you analyze the software industry currently, earnings revisions seem positive on a one- to two-year horizon,” noted Abigail Yoder, an equity strategist at JPMorgan.
“This isn’t strictly about what software revenue will look like in the near term. It’s more about how we place value on it, which seems to be the ongoing debate.”
In broader market news, oil prices are under some pressure, with WTI dropping 2.2% below $64 a barrel ahead of this weekend’s OPEC+ meeting.
This decline reflects reports of significant shipments from Saudi Arabia and other producing nations, coupled with ongoing negotiations between the U.S. and Iran, with a calm Strait of Hormuz allowing for uninterrupted supply flow.
Today’s economic updates include new and continuing unemployment claims, along with the Kansas City Fed’s manufacturing survey.
Tomorrow, we expect to see the January PPI report, which may show some alleviation of price pressures.
