US equity futures are pointing higher heading into Thursday’s session, with the move being led by Nvidia following another strong set of results.
The S&P 500 remains below its record high set earlier this month, but renewed strength across AI-related stocks could put the index back on a path towards that level.
The Nasdaq is leading the move higher, while Dow futures are comparatively subdued. That divergence reinforces the importance of understanding where leadership is actually developing beneath the surface rather than treating the major indices as one market.
Nvidia’s second-quarter results, released after Wednesday’s close, beat expectations on both revenue and earnings and came with a third-quarter outlook well ahead of forecasts. Revenue reached $96.2 billion against expectations of roughly $92 billion, while adjusted earnings of $2.22 per share also came in ahead of estimates.
Management guided third-quarter revenue to around $108 billion and projected approximately 70% revenue growth for the next fiscal year. That outlook has helped ease concerns that AI infrastructure spending may be starting to plateau and has brought buyers back into parts of the semiconductor sector.
Nvidia shares moved sharply higher in pre-market trading, with the reaction spreading into other AI-related and semiconductor names. That is encouraging, but we would still want to see the strength hold and develop before treating one earnings reaction as confirmation that leadership has fully returned to the sector.
From a technical perspective, however, little has changed despite Nvidia’s roughly 5% pre-market rise. The stock remains inside the consolidation that has been developing since it set a record high in May. Whether the earnings momentum is enough to fuel a confirmed breakout and open the door towards $300 remains to be seen.
Another major catalyst now stands between today’s optimism and the end of the week. Fed Chair Kevin Warsh delivers his first Jackson Hole address on Friday, with markets looking for greater clarity on the direction of monetary policy.
Following Wednesday’s inflation data, markets are still leaning towards another hold at the September meeting, with pricing around two-thirds in favour of no change. A more hawkish message from Warsh could therefore push yields higher and put renewed pressure on growth stocks, while anything softer could provide further support for the current move.
From a portfolio perspective, we continue to favour the strongest stocks in the strongest sectors rather than chasing the broader semiconductor complex on the back of one strong earnings reaction. Nvidia’s results are a positive development for the AI trade, but price still needs to confirm that the sector is moving back into a sustained uptrend.
We have held Nvidia shares since 2022 and will be looking to add further exposure once the next uptrend phase has been confirmed. Until then, we are happy to let price determine when the next opportunity presents itself.
For now, Nvidia has cleared the first hurdle. Friday’s Jackson Hole speech provides the next test.
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