A Market Searching for Direction
Markets are navigating a complex moment, attempting to digest a flurry of corporate earnings against a backdrop of shifting geopolitical signals. The previous session delivered a meaningful rebound across the board, with particular strength in small caps. Several catalysts converged to support that move: a bid in the 10-year Treasury complex pushed yields lower, offering a tailwind for equities, and renewed optimism about a potential deal with Iran briefly cooled tensions. Oil fell aggressively, dropping more than 4%, and equities rode that enthusiasm higher in the lead-up to Nvidia's earnings.
That optimism, however, looks fragile. Fresh comments from Iran regarding uranium have pushed oil prices back above the $100 level, reintroducing the geopolitical premium that had briefly dissipated. Combined with mega-cap earnings releases, today's session is likely to test whether the recent rally was a genuine inflection or simply a retracement bounce after several days of selling pressure.
One pattern worth noting in this earnings cycle: over the past three quarters, Nvidia's post-earnings sell-offs have not materialized aggressively during pre-market trading. Instead, the readjustment tends to occur once the cash equity session opens, as options positioning unwinds and traders close out their exposure. That dynamic — particularly in the first hour or two of trading — will likely be the dominant driver of today's price action.
Nvidia Delivers Across the Board
Nvidia delivered a strong report, beating both top and bottom lines as the market expected — and even exceeding some of the whisper numbers circulating ahead of the print. Revenue came in at $81.61 billion, representing roughly 85% growth on a year-over-year basis. Adjusted earnings per share landed at $1.87, beating Street expectations, while adjusted gross margins came in at 75%, in line with consensus. Guidance for the upcoming quarter beat by approximately $5 billion, which has become the expected pattern from this company.
Notably, Nvidia updated its reporting structure, readjusting some of its segments to better reflect the AI narrative and the edge technology within its portfolio. The data center business generated $75.2 billion in revenue, up 77% year-over-year. The newly broken-out hyperscaler segment performed strongly, while the AI cloud industrial enterprise segment grew 10% year-over-year, with a bounce-back guidance that also exceeded Street expectations.
Capital returns to shareholders received a significant boost. The quarterly dividend was raised to 25 cents from a single penny, and the board authorized an additional $80 billion in share buybacks. While $80 billion sounds enormous in absolute terms, when measured against the company's massive market capitalization and float, it represents a relatively modest adjustment.
The CPU business is also gaining attention, with Vera CPU revenue expected to contribute roughly $20 billion this year. Management expressed full confidence in the trillion-dollar revenue target for Blackwell, as well as the Reuben revenue forecast for the year.
Analyst response has been broadly constructive. Deutsche Bank raised its price target to $255, though it maintains a hold rating. Wedbush — perennially bullish on Nvidia — pushed its target to $330, and Truist raised its target to $307, both maintaining buy or outperform ratings. Market makers appear to have nailed the expected move; this has been a premium-sellers' play for the last three quarters, and that dynamic looks intact again.
Walmart's Cautious Signal on the Consumer
Walmart's results echo the cautious posture the company adopted roughly two and a half years ago. The headline numbers were respectable: revenue of $177.75 billion, growth of around 5.9% on a constant currency basis year-over-year, and adjusted earnings per share of 66 cents that came in largely in line with expectations. Global e-commerce growth was a clear bright spot, posting roughly 26% year-over-year growth.
The concern lies in the guidance and the underlying margin pressure. Q2 net sales growth is expected between 4% and 5%, versus a Street expectation closer to 5.1%. Adjusted earnings per share guidance for Q2 came in at 72 to 74 cents, against a Street estimate of 75 cents. Management called out pricing pressures and input costs eating into margins — packaging and resin were specifically flagged as a problem, alongside elevated fuel costs.
There is a strategic dimension to this softness as well. Walmart appears to be pushing prices lower to stay competitive and defend market share, particularly as Kroger has signaled similar intentions. The setup suggests a potential price war brewing across consumer staples and grocery, with each player attempting to keep customers in-house rather than lose them to competitors. Over the long term, higher inflation has historically been a tailwind for Walmart's business model, but the near-term guidance reflects the cost of defending share in a high-inflation environment. Shares traded down roughly 2.5% in pre-market on the back of these results.
Intuit Stumbles on a Tax Season Miss
Intuit's report was the most challenging of the bunch, sending shares down about 14%. Revenue grew 10% year-over-year but represented a slight miss versus Street expectations. Adjusted earnings per share came in at $12.80, narrowly beating the $12.57 estimate, but the segment detail told a more troubling story.
The tax season — running from February to April and representing Intuit's bread-and-butter business — generated revenue lighter than expected. More concerning was the forward outlook: management expects fewer tax filers next year, attributing part of that to lingering effects from COVID-19 on small business formation, alongside intensifying competition.
In response, Intuit announced it is cutting 17% of its workforce, with associated restructuring costs of approximately $320 million at the midpoint, largely to be recognized in Q4. The company also authorized an $8 billion repurchase program and raised its overall guidance — though the new guidance still came in lighter than Street expectations.
The weakness has rippled into other software names, though the impact has been muted. Intuit operates in a niche market segment, so its specific pockets of weakness do not necessarily generalize across the entire software industry. Still, missing the bar during what should be a favorable tax season — when filers are seeing favorable returns — is a notable signal.
Technical Levels and the Day Ahead
On the S&P 500, the top-traded options contracts this morning suggest an optimistic range, with significant call activity at the 7500 strike on the upside. On the downside, traders are watching the 7370 area as a key support level. The wide range is appropriate given the news flow: yesterday's bounce was strong, but today's tape has a more bearish complexion, with oil moving higher and the question of whether yesterday represented a meaningful turn or merely a technical retracement still unanswered.
A return to new all-time highs would likely need to come on the back of Nvidia and the broader semiconductor complex. The market makers have priced this earnings cycle accurately so far, and the first hours of trading will reveal whether the AI trade still has the strength to pull the broader index along with it, or whether consumer caution and software weakness will dominate the narrative.