This week’s earnings results underscored that the artificial intelligence (AI) buildout is not a zero-sum game, with both hardware and software stocks posting gains. The Nasdaq Composite rose 0.9%, the S&P 500 gained 0.5%, and the Dow Jones Industrial Average added 0.5%, marking its first winning week in three. The bulk of these gains occurred on Thursday, driven by Nvidia’s strong earnings and forward guidance, which lifted all three indices to their best day since August 4 [1].
Nvidia, the AI chip leader, reported better-than-expected fiscal second-quarter results, marking its fourth consecutive quarter of accelerating revenue growth. The company also issued a robust outlook for the next fiscal year, reinforcing confidence in AI demand and boosting the broader market. Nvidia shares ended the week up 1%. Notably, Amazon committed to purchasing an additional 2 million Nvidia GPUs in 2027 and 2028, despite developing its own AI chips. Nvidia CEO Jensen Huang stated that the return on investment capital for its AI infrastructure is now less than a year, and CFO Colette Kress noted that growth in the current quarter will be driven primarily by non-hyperscaler customers, including neoclouds like CoreWeave and Nebius, as well as enterprises. The company’s price target was raised to $280 from $260 [1].
On the software side, Salesforce delivered better-than-expected revenue and an upbeat outlook, further demonstrating that AI is acting as a tailwind rather than a threat to its business. CEO Marc Benioff dismissed concerns of a 'SaaSpocalypse' as 'nonsense,' highlighting that nine of the ten leading AI companies use Salesforce products, with their spending up 435% year over year. Salesforce also introduced Claudeforce, a tool leveraging Anthropic’s Claude to help salespeople utilize customer data for tasks such as composing emails and updating records [1].
Despite the positive earnings, stocks were little changed on Friday following Fed Chairman Kevin Warsh’s Jackson Hole speech, in which he expressed ongoing concerns about inflation and left the possibility of another rate hike open. As a result, traders increased the odds of a September rate hike to 55%, up from about 35% the previous day, according to the CME FedWatch tool [1].
CONCLUSION
Nvidia and Salesforce’s strong earnings and optimistic outlooks reinforced confidence in the ongoing AI boom, driving significant gains in major stock indices. However, the prospect of further interest rate hikes tempered market enthusiasm at the end of the week. Overall, the results suggest robust and broad-based demand for AI hardware and software, with both sectors poised for continued growth.