Wall Street’s major indexes were set for a muted open Wednesday as investors held their breath ahead of earnings from Nvidia, the AI chip giant whose results are expected to test the strength of the tech rally that’s been powering the market this year.
Nvidia has been a key driver of the market’s rebound since April lows, hitting a historic $4 trillion market value in July to become the world’s most valuable company. Investors remain confident in growing global demand for artificial intelligence technology, especially chips essential for AI infrastructure.
But some traders worry the tech sector, which makes up nearly half of the S&P 500, might be overvalued. The index’s current valuations are well above long-term averages, based on data from LSEG.
These concerns weighed on tech stocks last week after OpenAI CEO Sam Altman warned about a potential bubble. Meanwhile, a new study from MIT suggested AI tools are boosting personal productivity but not yet corporate profits.
Shares of Nvidia climbed slightly, up 0.4% in premarket trading ahead of Wednesday’s post-market earnings report. Options traders are bracing for a possible $260 billion swing in Nvidia’s market value depending on the results.
Investors will be closely watching how Nvidia’s business has been affected by ongoing U.S.-China trade tensions, especially since the company has significant sales in China. They’ll also look for details on Nvidia’s new revenue-sharing deal with the U.S. government and how that might shape future forecasts.
“It’s tough to pin down Nvidia’s impact in China because we don’t know if Chinese buyers are happy with the chips or if they’ll keep purchasing,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management. Still, he expects strong chip demand from other global markets to show up in the report.
As of 8:49 a.m. ET, Dow futures were flat, S&P 500 futures dipped 0.03%, and Nasdaq futures slipped 0.06%.
Big Nvidia customers like Microsoft and Meta, as well as other chipmakers including Broadcom and AMD, were struggling for clear direction in premarket trading.
Markets were also trying to steady after Tuesday’s dip, triggered by former President Donald Trump’s attempt to fire Federal Reserve Governor Lisa Cook. The controversial move faces likely legal hurdles, but if successful, it could let Trump appoint a more dovish Fed official, potentially threatening the central bank’s independence.
Investors are pricing in a 25 basis-point interest rate cut in September, based on LSEG data, with most major brokerages expecting the same move.
Richmond Fed President Thomas Barkin is scheduled to speak later Wednesday, and his comments will be monitored closely for clues about the Fed’s next steps.
In individual stocks, MongoDB soared nearly 30% after raising its annual profit forecast. Cracker Barrel gained 4.8% after the restaurant chain decided to keep its decades-old logo following social media backlash against a proposed redesign.
Kohl’s surged 19.7% after lifting its annual profit outlook. Meanwhile, J.M. Smucker’s shares fell 4.3% after the peanut butter maker reported weaker-than-expected first-quarter earnings.
