Market Backdrop
Tech is leading the move up. The NASDAQ is up nearly 1%, the S&P 500 is higher, and the Dow is close to flat, with small caps also flat. Yields are steadying, which helps. The 10-year sits around 4.66%, and when yields consolidate it signals the market is getting comfortable. Crude oil is down over 4.5% this week, settling near $82 a barrel. Economic sanctions may already be pressing on markets, which could support overall direction and mood.
The PCE inflation data from the prior day ran a bit hot on the headline number at 3.7%, with core still at 3.3%. Inflation stays elevated, so price pressure remains. More signals are due from Fed Chair Warsh at Jackson Hole, though he tends to hold his views close and avoids giving much guidance or dot plots, which is the main worry into the end of the week. Earnings are driving the lift in tech. Geopolitical risks are still present. Continued consolidation in yields and lower oil prices would add more support to stocks.
Nvidia (NVDA)
For five straight quarters Nvidia (NVDA) beat and raised but the stock sold off anyway. This time it is being rewarded. When earnings hit at 4:20 PM Eastern, the stock first dropped to about $203.50 before surging on the guidance.
The numbers: adjusted EPS of $2.22 beat the $2.09 expected. Revenue came in at $96.2 billion, a 106% jump year-over-year and 18% sequentially quarter-over-quarter. Net income rose 126% year-over-year to nearly $60 billion.
Guidance drove the rally. Revenue guidance is $108 billion, plus or minus 2%, versus street expectations near $104 billion - a $4 billion beat. Nvidia (NVDA) usually does not give firm guidance a full extra year out, but it pointed to a 70% growth rate in fiscal 2028, which starts in February next year. That is far above the 45% to 50% growth analysts expected.
The negatives that pushed the stock below $204 early: gross margins came in at 75% but guided to about 74% for the current quarter (Q3), with the CFO signaling margins may bottom near 71% to 72%. That spooked some investors, though these are tiny percentage moves and Nvidia (NVDA) holds one of the highest gross margins in the space, if not the highest. Investors moved past it and focused on growth. Memory chip prices ran far above expectations. CEO Jensen Huang said everything is going well, and the financing side of the business is not causing concern because other companies are ramping supply and raising prices, so demand is strong going forward.
Salesforce (CRM)
Shares are up roughly 10% in pre-market. The stock had struggled into the report, and the worry that software firms cannot make money from AI is fading. Adjusted EPS came in at $5.90, crushing estimates near $3.27. Remaining performance obligations rose 14% year-over-year to $33.5 billion, a sign of accelerating demand and strong bookings. Subscription and support revenue rose 12% year-over-year to about $10.8 billion.
Salesforce (CRM) announced a partnership with Claude from Anthropic, effectively a "Claude Force" version of its Agentforce product. Agentforce annual recurring revenue passed $1.5 billion, up more than 240% year-over-year, with related bookings still accelerating. Free cash flow hit $1.3 billion, up 71% year-over-year and almost double what the street expected. Much of the enthusiasm rests on the Anthropic tie-up. The read-through: software companies can monetize AI by spreading it across many products and forming lasting partnerships, which will be a key driver ahead.
CrowdStrike (CRWD)
Shares are rallying more than 9%. The stock was up about 60% on a 2026 basis. Revenue was $1.47 billion, up 26% year-over-year, beating estimates slightly. Subscription revenue grew to $1.4 billion, up 27% year-over-year. Annual recurring revenue grew 25% year-over-year to $5.84 billion. CrowdStrike (CRWD) lifted full-year guidance to about $6 billion, roughly 25% growth. Its Falcon Flex product and recurring subscription revenue, plus tie-ins across its platform covering different forms of cybersecurity, are widening its reach. AI is bringing more security threats, and CrowdStrike (CRWD) is capitalizing on that through its subscription services.
