Nvidia Revenue Jumps 56%, Surpasses Expectations
Data Center Falls Short; Uncertainty Over China Business
U.S. Q2 Growth at 3.3% on Rising Consumption, Sharp Import Drop
July PCE Inflation Data Due on 29th
The three major indices on the New York Stock Exchange were mixed in a narrow range on August 28 (local time). Diverging assessments of Nvidia's earnings, which were announced after the market closed the previous day, were reflected in investor sentiment, resulting in a lack of clear direction for stock prices.
As of 11:16 a.m. on the New York Stock Exchange, the blue-chip Dow Jones Industrial Average was down 74.8 points (0.16%) at 45,490.43 from the previous trading day. The large-cap S&P 500 Index was up 5.71 points (0.09%) at 6,487.11, and the tech-heavy Nasdaq Index was up 86.727 points (0.4%) at 21,676.867.
By stock, Nvidia was down 0.86%. Broadcom and Micron Technology were up 2.6% and 3.21%, respectively. Tesla was down 1.34%.
The previous day, Nvidia announced that its revenue for the second quarter of fiscal year 2026 (May to July 2025) increased by 56% year-on-year to $46.74 billion, with earnings per share (EPS) of $1.05. These figures exceeded the estimates compiled by market research firm FactSet ($46.05 billion and $1.01, respectively). However, its core data center business fell short of expectations. In particular, sales of the H20 AI chip, which was developed with reduced performance for the Chinese market, were sluggish due to U.S. export restrictions. The U.S. government approved the resumption of H20 sales to China at the end of July. Nvidia has decided to exclude China from its future earnings forecasts.
Opinions on Nvidia's earnings were divided. Some disappointment stemmed from the results not significantly surpassing expectations, but major Wall Street banks maintained a positive outlook. JP Morgan, Citigroup, and Bernstein raised their target prices for Nvidia following the earnings announcement.
David Wagner, Head of Equities at Aptus Capital Advisors, commented, "The share price decline is somewhat of a premature overreaction and should be seen as a buying opportunity," adding, "Nvidia's quarterly revenue growth rate exceeds 50%."
The U.S. economy showed stronger growth than expected. According to the Bureau of Economic Analysis (BEA) under the U.S. Department of Commerce, the preliminary estimate for real gross domestic product (GDP) in the second quarter was an annualized increase of 3.3% from the previous quarter. This figure is 0.3 percentage points higher than the advance estimate (3.0%) and also exceeds the Dow Jones forecast (3.1%). The 'V-shaped rebound' from a 0.5% contraction in the first quarter to 3.3% growth in the second quarter was largely driven by an improved trade balance due to reduced imports and increased consumer spending. Growth in corporate investment was also cited as a major factor.
Experts predict that as U.S. consumers and businesses adapt to trade policies, the U.S. economy will continue to grow moderately. However, some caution that future trends in consumer spending should be closely monitored.
Heather Long, Chief Economist at Navy Federal Credit Union, said, "It's fortunate that Americans continued to spend despite tariffs and uncertainty, with consumption coming in higher than previously expected, but compared to the past few years, growth has slowed," adding, "As U.S. consumers begin to visibly feel the effects of tariffs, consumption and the growth rate are likely to remain subdued at around 1.5% going forward."
Investors are focusing on the July Personal Consumption Expenditures (PCE) Price Index, which will be released by the U.S. Department of Commerce on the 29th. The core PCE Price Index, which excludes food and energy, is expected to have risen 2.9% year-on-year in July. This would be higher than June's 2.8% and the highest level in five months.
U.S. Treasury yields were steady. The yield on the benchmark 10-year Treasury note fell by 1 basis point (1bp = 0.01 percentage point) to 4.21% from the previous day, while the yield on the 2-year Treasury note, which is sensitive to monetary policy, rose by 1 basis point to 3.63%.
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