By Peter Bergman (MoneyAmped.com)
U.S. futures rise as traders analyze the impact of another strong quarter of impressive gains from Nvidia, a prominent player in the field of artificial intelligence. The semiconductor group’s revenue experienced a remarkable surge of 262%. Chief Executive Jensen Huang suggests that this number will be further enhanced this year with the imminent release of their latest series of AI chips.
In another development, OpenAI has entered into a content-sharing agreement with News Corp (NASDAQ:NWSA), marking its most recent collaboration with a prominent news publisher.
Stock Market Futures Surge After Impressive Earnings Report From Nvidia
U.S. stock futures indicated an upward trend on Thursday as investors processed another impressive quarterly earnings report from Nvidia, the leading artificial intelligence chipmaker.
At 03:43 ET (07:43 GMT), the S&P 500 futures contract had increased by 27 points or 0.5%, Nasdaq 100 futures had slightly risen by 158 points or 0.8%, and Dow futures had advanced by 30 points or 0.1%.
The primary benchmarks concluded the previous session in negative territory, burdened by minutes from the Federal Reserve’s most recent gathering that indicated policymakers at the U.S. central bank anticipate a gradual decline in inflation towards their desired 2% objective.
Despite indications of a slowdown in price pressures from recent economic data, a number of Fed officials have expressed the need for further evidence of the sustainability of this decline before considering any potential interest rate cuts.
Speculation about the Federal Reserve potentially reducing interest rates by 25 basis points in September experienced a slight decrease, as reported by CME Group’s closely-watched FedWatch Tool.
Nvidia’s Most Recent Impressive Performance
Following the release of its highly anticipated first-quarter results, Nvidia experienced a significant surge in its stock price, with shares increasing by over 6% during extended hours of trading. The semiconductor company’s CEO also highlighted the remarkable increase in demand for its forthcoming AI-optimized chip.
In the three months leading up to April 28, revenue experienced a remarkable surge of 262% compared to the previous year, reaching an impressive $26 billion. This surpassed the expectations of Wall Street analysts, who had predicted revenue to be around $24.7 billion. Nvidia anticipates that the revenue will keep expanding to $28 billion in the upcoming quarter. Analysts had projected a quarterly estimate of $26.8 billion.
The revenue generated by data centers, which serves as a strong indicator of the success of its AI chips, experienced an impressive surge of 427% compared to the previous year, reaching an all-time high of $22.6 billion. Nvidia’s data center GPUs have become integral components of the computational strength supporting generative AI products.
“We are witnessing the dawn of a new era in industry,” stated CEO Jensen Huang. “Artificial intelligence is poised to revolutionize various sectors, delivering substantial enhancements in productivity and enabling companies to optimize costs and energy consumption. Moreover, it will open up new avenues for generating revenue.”
Huang later informed investors that the company is poised to experience a significant increase in revenue this year from its Blackwell line of chips, suggesting that the demand for AI shows no signs of slowing down.
The potential for a long-lasting surge has greatly benefited Nvidia’s suppliers in Asia, such as SK Hynix and Samsung Electronics (KS:005930), who produce memory chips, as well as TSMC, a contract semiconductor company.
OpenAI and News Corp Have Entered into a Partnership to Share Content
News Corp’s A shares surged in after-hours trading following the media conglomerate’s agreement with OpenAI. The agreement provides the ChatGPT creator with access to a selection of its prominent publications.
As part of the agreement, OpenAI will have the opportunity to access a wide range of content from various reputable publications, such as The Wall Street Journal, The Times, The New York Post, and Marketwatch. This includes both fresh and archived material.
The two parties did not disclose the agreement’s financial details. However, according to The Wall Street Journal, which is owned by News Corp, the agreement was estimated to be worth more than $250 million over five years.
OpenAI, supported by Microsoft, has been actively seeking to strengthen its relationships with various prominent media organizations, such as the Financial Times. This effort is aimed at acquiring content that can be used to train its leading AI models.
However, OpenAI has also been criticized for purportedly using data without proper authorization to train its models. In late 2023, the company was sued by The New York Times, alleging copyright infringement.
DOJ Will Look For Live Nation and Ticketmaster to Be Split Up
Shares of Live Nation Entertainment (NYSE:NYSE:LYV) declined in after-hours trade on Wednesday due to reports suggesting that the U.S. Department of Justice was preparing to file a lawsuit against the Ticketmaster-parent company for antitrust violations.
According to sources familiar with the matter, Bloomberg News reported that the Department of Justice and a coalition of states are getting ready to file a lawsuit, potentially in the Southern District of New York, as early as Thursday.
Shares of Live Nation experienced a significant decline, dropping as much as 9.3% to $92 following the release of the report. However, the company has managed to recover some of those losses since then.
According to the report, the lawsuit is expected to highlight numerous antitrust violations committed by Ticketmaster due to its apparent monopoly on concert ticket sales. The request will aim for resolution, with a separation of Live Nation and Ticketmaster being a key area of attention.
Oil Prices Decline
Crude prices experienced a slight decline, continuing their downward trend for the fourth session in a row. This drop was influenced by the indication in the Fed minutes that U.S. interest rates will likely remain high for an extended period.
At 03:43 ET, the U.S. crude futures (WTI) were down 0.1% at $77.47 per barrel, while the Brent contract declined 0.1% to $81.86 a barrel.
Raising interest rates can lead to higher borrowing expenses, potentially impacting economic expansion and the demand for oil in the largest consumer of crude globally.
In addition to dampening overall sentiment, the increase in U.S. crude stocks by 1.8 million barrels last week, as reported by the Energy Information Administration, also contributed to the negative outlook. Experts had predicted a decrease of 2.5 million barrels.
