Nvidia, the bellwether stock for the AI trade, has crowned a strong earnings season with quarterly results that have smashed analysts’ expectations. The semiconductor giant, which is the world’s most valuable company, doubled revenues year-over-year to nearly $100 billion.
Perhaps even more importantly, Nvidia indicated that it sees no sign of AI-related demand for its products slowing down. The company forecasts that its revenue will grow by about 70% for fiscal 2028 on the back of increased spending on computer hardware by enterprises and the hyperscale cloud computing companies.
Nvidia CEO Jensen Huang also defended the company’s circular financing arrangements with some of its clients, reassuring markets about its exposure to credit risk. Nvidia’s results allayed fears that the AI infrastructure trade is running out of steam, giving the Nasdaq a 1.14% lift and the S&P 500 a 0.75% gain for the week at the time of writing.
The blowout results lifted Nvidia’s stock by around 8.74% on Thursday, adding more than $400 billion to its market capitalisation and pushing its value to more than $5.5 trillion. Nvidia, as a single stock, now comprises more than 7% of the S&P 500’s market capitalisation and 13% of the value of the Nasdaq 100.
This is important but also carries risks. Semiconductor companies have driven a disproportionate share of market gains in 2026, with the S&P 500 up 13.79% year-to-date and Nasdaq up 17.87%. According to investment bank Stifel, the semiconductor industry now accounts for around a third of the S&P 500’s total market value, while tech hardware stocks comprise 45% of the Nasdaq 100.
The AI hardware infrastructure trade has also shaped emerging markets. Taiwan’s TSMC is up 55.48% year-to-date, while South Korea’s Samsung Electronics has surged 121.85% and SK Hynix 165.75%. Both South Korean chip giants initially rallied after Nvidia announced results, before faltering on Friday trade as investors took profits.
Nvidia’s blowout reveal of results suggests that the AI infrastructure trade is robust. However, hyperscalers, AI accelerators, AI infrastructure suppliers, and semiconductor companies will need to deliver exceptional results to sustain share price momentum.
Indeed, Nvidia shares have fallen in six of the last eight post-earnings sessions, despite consistently beating forecasts. This illustrates the extent to which investors have priced in good news and how lofty expectations are after several quarters of extraordinary growth from AI-related companies.
The outlook for AI infrastructure companies may also be affected by the global macroeconomic climate. Rising bond yields and uncertainty over the broader interest-rate outlook could make it more expensive to finance the huge investments required to build new data centers.
For now, however, the much-anticipated great reveal of Nvidia’s results has validated this week’s share price gain and its impact on the broader market indices.
“It is clear the AI wave is far from over, as demand continues to expand more and more.”
– Ryan Detrick at Carson Group
“Nvidia’s results show that the AI boom is not running out of demand… while delivering that growth is becoming more expensive and capital-intensive.”
– Lale Akoner, Global Market Strategist at eToro
Global News
- Nvidia delivered exceptional second-quarter results on Wednesday, easing concerns that the AI investment boom is losing momentum. Sales more than doubled to $96.2 billion, while strong demand for its AI chips continues to outstrip supply. The company also took the unusual step of forecasting revenue growth of about 70% for the next fiscal year, well above the 45% expected by analysts. The outlook reinforced confidence in the broader AI trade on Thursday, sending Nvidia shares up 8.7% and adding $442 billion to its market value, the second-largest one-day gain by any company on record.
- US technology stocks rallied on Thursday as strong corporate forecasts reinforced confidence that the AI investment cycle remains intact. Nvidia’s outlook lifted semiconductor, memory and other AI-linked stocks, while upbeat forecasts from Salesforce and CrowdStrike drove gains in software. The Nasdaq 100 rose about 1%, outperforming the broader market, as investors took the results as evidence that demand across the technology sector remains robust despite recent concerns over the sustainability of AI spending.
- Profit optimism is keeping Wall Street bullish on US equities, although strategists expect only modest further gains after this year’s strong rally. A Reuters poll published on Wednesday forecast the S&P 500 ending 2026 at 7,900, about 3% above Tuesday’s close, supported by strong earnings and continued AI investment. Second-quarter profits are on track to rise 33.5%, the strongest growth since 2021, while rising leverage among megacap technology companies and uncertainty around the November midterms remain key risks.
- The US Treasury’s decision to double long-dated bond buybacks from September is drawing criticism on Wall Street amid concerns over intervention in the world’s largest bond market. Billionaire investor Stanley Druckenmiller called the move a mistake on Tuesday, while Citadel Securities warned it could weaken the dollar and fuel inflation. Critics argue that buybacks do little to address the underlying fiscal pressures, with US national debt now above $40 trillion and the 30-year Treasury yield still around 5.2% on Thursday.
- Wall Street is refocusing on the “debasement trade” as concerns over US fiscal policy and market intervention revive fears of a weaker dollar. Treasury Secretary Scott Bessent’s support for the yen and expanded bond buybacks have raised concerns that efforts to lower borrowing costs without tackling the US debt burden could put further pressure on the dollar. Investors are increasingly turning to gold and Bitcoin as hedges against dollar weakness, although strong demand for US assets suggests confidence in the currency remains broadly intact.
- Gold climbed to a three-month high above $4,680 an ounce on Monday as concerns over US fiscal policy and a weaker dollar drove investors towards alternative assets. The metal gained more than 5% last week, while gold-backed exchange-traded funds recorded their strongest inflows since January, signalling renewed investor demand for bullion as protection against fiscal and currency risks.
- Notwithstanding recent weakness in the dollar, the currency posted its biggest gain in more than two weeks on Wednesday, recovering about half the losses triggered by Bessent’s expanded bond-buyback plans as expectations of a Fed rate hike strengthened. The rebound highlights competing forces facing the currency, with concerns over increased Treasury intervention weighing on confidence in the dollar while prospects of higher interest rates provide support.
- US inflation remained elevated in July while consumer spending stalled, reinforcing the Fed’s dilemma between persistent price pressures and weakening demand. Core Personal Consumption Expenditures, the Fed’s preferred inflation gauge, rose 0.2% from June and 3.3% from a year earlier, while inflation-adjusted spending was flat after strong gains in May and June. The mixed picture supports a cautious approach to rates.
- Diplomatic efforts to reopen the Strait of Hormuz gained momentum on Thursday after Qatar pressed Iran to restore freedom of navigation and Tehran agreed to draw up conditions for normal shipping to resume. Crude flows are already recovering, with an estimated six million to eight million barrels a day now moving through the strait as Gulf producers increase exports, although volumes remain about half pre-war levels. The improvement is helping ease supply concerns and push oil prices lower, but continued attacks on vessels mean shipping and global energy markets remain exposed to disruption.
- More than 43% of global oil supply now comes from countries affected by conflict, with the Iran-Russia-Ukraine wars contributing to the largest oil supply disruption on record, Reuters calculations showed on Tuesday. The conflicts have also taken about 10% of global refining capacity offline, tightening fuel markets and driving prices higher. With emergency stock releases winding down and inventories falling, prolonged disruption risks keeping inflation and energy prices elevated.
- US-Canada trade tensions escalated further on Thursday after Trump renamed Lake Ontario “Lake America,” adding to an increasingly bitter dispute following the collapse of trade talks last week. The US has imposed 50% tariffs on a range of Canadian goods and threatened to double tariffs on Canadian vehicles and parts to 50% from January, raising risks for the highly integrated North American auto industry. The two sides remain divided over tariff relief and Canada’s ability to negotiate trade agreements with other countries, with no new talks currently scheduled.
- Abu Dhabi royal Sheikh Tahnoon bin Zayed al Nahyan and co-investors were revealed on Thursday to be backing a 49% stake in a new US crypto bank linked to the Trump family. US regulators this month granted preliminary approval to the bank, which will manage World Liberty Financial’s $4 billion USD1 stablecoin. The investment is drawing scrutiny because Tahnoon is the UAE’s national security adviser and brother of its president, deepening the Trump family’s financial ties with a senior foreign official.
- SpaceX plans to begin launching Nvidia-powered AI satellites in late 2027 and reach significant scale in 2028, Elon Musk said on Monday, bringing its ambitions for orbital data centres closer to deployment. The company is positioning space-based computing as a potentially lower-cost alternative to terrestrial data centres and has chosen Nvidia exclusively to power the infrastructure. The project represents another potential source of demand for AI chips as the industry searches for ways to overcome the cost and power constraints of expanding computing capacity.
- Meta agreed on Wednesday to pay up to $18 billion to settle claims brought by US states over alleged harm to young social media users, while accepting significant changes to how Facebook and Instagram operate. The agreement introduces tighter time limits, parental controls and independent oversight, and resolves litigation alleging Meta deliberately encouraged compulsive use among younger users. Some payments depend on rivals adopting similar safeguards, potentially extending the regulatory impact across the wider social media industry.
- Michael Saylor’s Strategy, the world’s largest corporate holder of Bitcoin, faces a new threat to its Bitcoin-buying model as MSCI considers excluding companies deemed primarily focused on accumulating assets rather than operating businesses from its global equity indexes. Removal could prompt index-tracking funds to sell Strategy shares, shrinking its investor base and making it harder for the company to raise capital to finance further Bitcoin purchases. MSCI is consulting investors on the proposed changes, with a decision expected later this year.
- Shein’s Hong Kong IPO is set to value the fast-fashion retailer at about $27 billion, roughly 70% below its 2022 private-market peak, as tariffs, regulatory pressures and intensifying competition slow its once-rapid growth. The company launched the offering on Monday after abandoning earlier plans to list in New York and London. With margins under pressure and growth slowing sharply, the reduced valuation reflects a fundamental shift in how investors view Shein, from a hyper-growth disruptor to a more mature global retailer facing rising costs and regulatory scrutiny.
- As at Thursday’s close the S&P 500 was 0.75% up for the week.
Local News
- South Africa’s economic outlook weakened for a third consecutive month in June, according to the South African Reserve Bank’s leading business cycle indicator, released on Tuesday. The index fell 1.4%, mainly due to lower export commodity prices and weaker money supply growth. The decline points to continued pressure on economic activity as businesses contend with a difficult global environment and higher oil prices.
- The Industrial Development Corporation (IDC) is considering private shareholders for the first time in its 86-year history to raise capital for South Africa’s re-industrialisation. The state-owned financier said on Thursday that its core business remained profitable and disbursed R17 billion in development funding, but losses at Foskor and Mozal pushed the wider group into an annual loss of R4.7 billion.
- South Africa’s tourism sector gained further momentum in July, with foreign arrivals rising 17.3% from June to 1.27 million, according to Statistics South Africa data released on Wednesday. Arrivals were also 6% higher than a year earlier, strengthening a sector that contributes 4.9% to GDP and which the government is targeting as an important driver of economic growth.
- SARS and the National Treasury asked the Constitutional Court on Wednesday to overturn a ruling that limits the Finance Minister’s power to adjust the VAT rate prior to Parliamentary approval. The government argued that removing the power could make it harder to respond quickly to revenue shortfalls and force it to borrow more. The DA maintains that taxation must be approved by Parliament. Judgment has been reserved, with the eventual ruling set to determine how much authority government has to adjust taxes during the budget process.
- Johannesburg will need external financial support to address its deepening fiscal crisis, but any government intervention should be tied to strict financial reforms, the Centre for Development and Enterprise said on Monday. Unpaid customer debt has climbed to almost R72 billion, weakening the city’s ability to fund infrastructure and meet its obligations. With Johannesburg accounting for about 16% of South Africa’s economy, government and business are stepping up efforts to stabilise the city, while it increasingly turns to private capital to revive stalled infrastructure and inner-city development projects
- Eskom has cut diesel spending by 83% to R992 million so far this financial year as improved performance from its coal-fired fleet sharply reduced reliance on costly emergency generation. The utility said on Monday that its energy availability factor has reached its highest level since 2020, while South Africa has now gone 462 consecutive days without load-shedding. The improvement is also limiting Eskom’s exposure to rising diesel prices following disruption to global oil supplies.
- South African precious-metals miners are heading for their strongest month on record as recovering gold and platinum prices drive a sharp rebound in the sector. The FTSE/JSE Precious Metals and Mining Total Return Index has gained about 38% in August, reversing its losses for the year, with several leading gold producers rising more than 40%. Gold has climbed nearly 15% this month as concerns over US fiscal policy and a weaker dollar revive demand for bullion, while South African producers are benefiting from relatively low costs and stronger margins. The mining rally has helped lift the broader South African equity market 4.6% this month.
- Blu Label Unlimited reported a R4.49 billion full-year loss on Wednesday after taking a multi-billion-rand impairment on its Cell C stake following the mobile operator’s JSE listing, masking an otherwise profitable underlying business. Excluding the write-down, the group generated R677 million in net profit. With Cell C-related costs not expected to carry into the new financial year, Blu Label enters 2027 with a simpler structure and greater focus on its core businesses, while a new dividend policy targets returning 30% to 50% of core headline earnings to shareholders through dividends or share buybacks.
- Discovery expects full-year normalised operating profit to rise between 15% and 20%, driven by strong performance from its South African businesses and continued growth in Vitality. The company said on Wednesday that headline earnings per share are expected to increase by 31% to 36%, boosted by the R4 billion purchase of its Sandton head office, which replaced a more expensive long-term lease. Discovery shares rose nearly 5% following the update.
- Clicks is targeting South Africa’s R900 billion township economy with the launch of KwaMakhi, a smaller-format retail brand designed to extend its reach beyond traditional shopping centres. The company opened its first store in Tembisa on Thursday and plans 10 outlets by year-end, with about 2,000 potential locations that its existing format cannot currently serve. The stores will focus on everyday essentials, smaller pack sizes and lower prices, giving Clicks a potentially significant new growth channel among lower-income consumers.
- As at the time of writing, the rand strengthened by 0.17% against the dollar, and the ALSI was 0.72% down for the week.
Sources: Dynasty, Reuters, Bloomberg, Business Day, ITWeb, etc.
