Upbeat results from Salesforce on Wednesday coupled with news of its linkup with AI lab Anthropic sent the business software developer's stock up more than 10% overnight, underscoring the recent bounce in a beaten-down part of the market.
The software-as-a-service sector was battered earlier in the year due to concerns that rapid AI development would damage - if not destroy - their business models. But the sector as a whole has recouped all the losses suffered over the past year, even though it's still underperformed the S&P 500 by roughly 30% in the interim.
Hotter PCE inflation and global central bank watch
The other big news of the day was the release of slightly-hotter-than-forecast U.S. PCE inflation for last month, with annual headline and core rates of the Fed’s favoured price gauge running at 3.7% and 3.3%, respectively. One component pushing up prices was, perhaps unsurprisingly, memory chips, which represent a larger share of the PCE index than the consumer price basket.
This inflation report offered little to cheer Fed officials as they get set to start their annual Jackson Hole conference, where Chair Kevin Warsh gives a keynote speech tomorrow.
Elsewhere, oil prices kept slipping lower, with news of more diplomatic talks between Gulf states. Iran and Oman are working to finalize details of an agreement to control the Strait of Hormuz, according to a senior Iranian source.
Finally, in Europe on Wednesday, European Central Bank officials indicated the ECB was preparing another rate rise next month, with little appetite for further hikes after that. European bond markets are bracing for that rate move and the start of what could be a tense government budget season in France and elsewhere.
Tech rally broadens and Meta settles teen-usage claims
Beyond Nvidia, upbeat results from business software firm Salesforce and cybersecurity company CrowdStrike saw both their share prices leap more than 10% before today's bell.
These moves rippled across the AI chip and infrastructure world, with South Korea’s chip-heavy KOSPI rising 1.5% on Thursday. However, Japan's Nikkei dipped slightly, weighed down by Nvidia supplier Advantest, reversing early gains.
In other tech news, Meta Platforms agreed to pay up to $18 billion over the next decade and strictly limit how teenagers use Facebook and Instagram to resolve claims that it had designed these social media platforms to addict children.
Nvidia's results and U.S. inflation shape the morning mood
Whatever doubts people may have about AI demand, Nvidia's results certainly don't show it. The $5 trillion chip juggernaut comfortably ticked all the boxes yet again with its quarterly update yesterday. Meanwhile, U.S. PCE inflation came in slightly hotter than anticipated ahead of the start of the Federal Reserve's Jackson Hole Symposium.
Nvidia's stock rose almost 5% overnight after the chip giant beat estimates and reported that its data center revenue more than doubled over the past year, with 70% sales growth projected in 2027.
Reports that Nvidia is planning to buy recently-hacked AI platform Hugging Face for $13 billion did little to douse its stock.
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