Tonight, I can't sleep!

【Introduction】Tech Stocks Rise as Market Awaits NVIDIA Earnings Report

Hello everyone, continue to follow the performance of overseas markets tonight.

U.S. Stocks Rise

On the evening of February 25, the three major U.S. stock indices rose, with tech stocks leading the gains. The Dow Jones Industrial Average edged up slightly, the Nasdaq increased nearly 1%, and the S&P 500 rose about 0.4%.

Tonight, investors worldwide are awaiting NVIDIA’s latest earnings report released after the market closes. NVIDIA’s stock price rose over 1%. Investors are reassessing the high valuations of tech stocks and growing skeptical of the hefty AI capital expenditures by large cloud service providers. Amid widespread AI technology anxiety, the market hopes for evidence that AI prospects remain solid.

An analyst said, “Market confidence over the next few days largely depends on NVIDIA’s earnings. As large cloud providers announced increased capital spending in recent weeks, the market expects this chipmaker to forecast revenue exceeding consensus estimates and to deliver strong sales growth.”

Another AI player, Oracle, saw its stock rise about 3%, leading the continued rebound in software stocks.

In the previous trading session, concerns about AI disrupting various industries eased, leading to gains in major stocks. After Meta announced a multi-year agreement with AMD, the entire market was boosted.

The first stablecoin issuer, Circle, saw its stock surge over 20%. Previously, the company stated that despite a sluggish digital asset market in Q4, strong demand for its stablecoins drove growth in profits and revenue.

Circle’s USDC stablecoin circulation increased by 72% year-over-year, reaching $75.3 billion. The company also noted that its reserve return rate for the quarter ending December 31 was 3.8%. Most of Circle’s profits come from interest earned on U.S. government securities held as reserves, which support the stablecoin’s 1:1 value.

Waiting for NVIDIA

Options markets expect NVIDIA’s stock to fluctuate about 5% in either direction the day after earnings are announced. In the past two earnings reports, the stock declined the following day.

While most Wall Street professionals anticipate strong results amid surging infrastructure spending, the market remains uncertain about how the stock (and related stocks) will react amid AI disruption risks and ongoing concerns over massive investments.

Seaport Global senior analyst Jay Goldberg predicts limited upside for NVIDIA. Ken Mahoney, president of Mahoney Asset Management, said, “Even if they deliver impressive data, we know the market is very volatile.”

After leading the market higher in recent years, NVIDIA’s stock has stagnated over the past few months, rising only 3.8% since Q4 last year. Investors have begun questioning whether the billions of dollars invested by clients like Alphabet and Microsoft in AI are worthwhile. Meanwhile, investors are fleeing industries perceived as vulnerable to AI disruption.

Another key indicator investors will watch closely is gross margin. Last year, high production costs for Blackwell chips put pressure on this profitability metric. The market expects NVIDIA’s adjusted gross margin for Q4 to be 75%, the highest in over a year, and to remain near that level this fiscal year. With memory chip prices rising and other costs increasing, investors want to confirm whether this profitability is sustainable.

Additionally, the market is monitoring progress on Blackwell and the upcoming Rubin chips. NVIDIA CEO Jensen Huang said last October that these two chip lines could generate $500 billion in revenue in the coming quarters, with the milestone expected to be reached faster than anticipated.

Beyond data, Huang’s comments during the earnings call will also be closely watched. Earlier this month, he called the sell-off of software stocks due to AI disruption fears “the most illogical thing in the world.” Since then, panic selling has spread to dozens of companies in wealth management, real estate services, and other sectors.

Some analysts believe that if NVIDIA’s earnings are positively received, it could help boost market sentiment caught in the “AI pain trade.” “If NVIDIA says they are optimistic about the entire sector and structure, I think everything will rise, including software stocks,” they said.

In the precious metals market, gold and silver continue to maintain strong upward momentum. At the time of writing, London spot gold and silver prices increased by 1.16% and 3.83%, respectively.