Nvidia surges over 8%, its market capitalization soars by $440 billion, breaking the "earnings day curse" and saving tech stocks.

Nvidia dispelled the gloom surrounding AI trading with an explosive earnings report.

On Thursday, Nvidia's stock price surged 8.7%, marking its biggest single-day gain since April 2025, translating to a $442 billion increase in market capitalization. This surge is second only to Microsoft's $450 billion single-day market capitalization increase in July—the largest single-day market capitalization gain in history. Nvidia's strong second-quarter results and optimistic outlook for semiconductor sales next year drove the S&P 500 information technology sector up 3.4%, making it the only sector to close higher that day and propelling the overall market index higher.

Nvidia's previously released strong outlook – forecasting revenue growth of approximately 70% for the next fiscal year, significantly exceeding the market's previous expectation of around 45% – prompted Wall Street firms to generally raise their ratings and target prices, calling the guidance "astounding" and implying that current market expectations have room for upward revisions of over $100 billion. JPMorgan Chase, however, pointed out that while the outlook has far exceeded expectations, it may still be a conservative estimate because the company explicitly characterized the current situation as "supply constrained," meaning that if supply were unconstrained, actual demand would be significantly higher.

Previously, market doubts about the prospects of AI investment returns, the complexity of data center financing structures, and the sustainability of chip demand had shaken the confidence of some Wall Street investors in the sustainability of AI deals. Nvidia's earnings report, with a nearly $5 trillion increase in market capitalization, provided a strong response and caught option traders who had previously bet on a decline in stock price off guard.

Breaking the "Earnings Day Curse"

Nvidia's phenomenal growth has become so deeply ingrained in Wall Street's collective perception that investors generally expect its earnings to exceed expectations, leading to the stock falling in six of the past eight earnings reports. This week, a large number of options traders are still betting on a decline in the stock price following the earnings release.

However, on Thursday, Nvidia once again defied expectations. Its outstanding second-quarter results caught short sellers off guard, sending its stock price soaring 8.7% in a single day, adding $442 billion to its market capitalization. According to the Wall Street Journal, this increase is only slightly less than the $450 billion single-day market capitalization gain record set by Microsoft in July of this year.

Technology stocks showed mixed performance, with software stocks leading the gains.

Nvidia's strong performance boosted the broader market, but performance within the tech sector was mixed. The Nasdaq Composite Index rose 1.6%, while the Dow Jones Industrial Average gained 0.2%, or approximately 106 points.

At the individual stock level, Microsoft, SpaceX, and Oracle all recorded gains, while Intel rose by 4.4%; Amazon, Meta, and Alphabet, however, closed lower.

The software sector performed particularly well. Salesforce surged 23% in a single day after announcing a deeper partnership with Anthropic, boosting market confidence in its AI integration capabilities. Cybersecurity company CrowdStrike rose 21% after raising its earnings guidance in its report, partly due to new business growth driven by the continued spread of AI-related security risks. Shares of other software companies such as Palo Alto Networks, ServiceNow, and Synopsys also rose.

Nvidia's role has quietly shifted: from chip seller to major investor.

Despite the overall boost in market sentiment, several financial figures disclosed in Nvidia's earnings report have also drawn the attention of analysts. As of July 26, Nvidia held $99 billion in equity investments, with another $25 billion in equity investment commitments yet to be fulfilled; long-term debt, meanwhile, surged to $33 billion.

In addition, Nvidia is working with several major Wall Street banks to provide up to $500 billion in financing guarantees for potential customers; the plan is still in its early stages.

"These figures don't suggest the demand is fake; the demand is clearly real right now," said Dan Hanbury, global equity portfolio manager at investment management firm Ninety One. "But they do indicate that Nvidia is increasingly assuming working capital for its own customer base."

Market attention turns to Jackson Hole

Beyond the boost from Nvidia's earnings report, the market's next focus has shifted to the macro level. On Friday, investors will turn their attention to Jackson Hole, Wyoming, hoping for further guidance from Federal Reserve Chairman Warsh on the path of interest rate policy.

Recently, persistent inflationary pressures, a renewed deterioration in the US fiscal outlook, and a bond sell-off triggered by massive debt financing by AI giants have jointly pushed US Treasury yields to multi-year highs. On Thursday, the 10-year US Treasury yield was essentially unchanged, remaining around 4.671%.

Standard Chartered analysts expect Warsh to attempt to rebuild market confidence in the Federal Reserve's determination to control inflation and convince investors that a more low-key central bank poses no risk to the economy. "Both tasks are quite challenging, and we are increasingly skeptical of his ability to succeed," the analysts wrote in a report.

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