U.S. stock futures traded broadly steady on Wednesday as investors eagerly awaited Nvidia’s highly anticipated earnings report, seen as a pivotal test for the tech-driven summer rally.
Why it matters: Nvidia’s earnings are considered a crucial indicator for the broader AI trade that has driven the bull market in stocks. The company’s results could either dampen or propel this year’s rally.
The details:
- Expectations for Nvidia, the world’s most valuable AI chip giant, are sky-high, with the company expected to post record high revenue and adjusted profit for the second quarter.
- However, investors are watching for the fallout from President Trump’s curbs on China chip sales, which Nvidia forecast will deliver an $8 billion hit to its quarterly bottom line.
- In premarket trading, shares of MongoDB surged over 30% following surprising momentum in the database software provider’s subscription revenue, driven by accelerating revenue growth in its Atlas cloud database service and new customer acquisition.
- Okta’s stock rose more than 5% premarket after beating earnings estimates and lifting its full-year revenue outlook.
On the trade front, the removal of tariffs on all US industrial goods could clear the way for an easing of duties on EU auto imports in return. Meanwhile, Trump’s hefty 50% tariffs on Indian products kicked in on Wednesday, in reprisal for India’s purchases of Russian oil.
What they’re saying:
- “Many of our recently added customers are building AI applications, underscoring how our value proposition is resonating in the AI era and why MongoDB is emerging as a key component of the AI infrastructure stack,” MongoDB CEO Dev Ittycheria said.
- “I know investors are really anxious and Nvidia has not performed well the last few times it’s reported, but the story arc there remains that it’s one of the most important companies in the world in the middle of the biggest structural change in the world economy. It really wouldn’t change our thesis if the stock reacted poorly,” Tom Lee, head of research and chief investment officer of Fundstrat Capital, said on Tuesday.
The other side: Concerns over a $1 trillion stock rally in China have led brokers to limit trades, hoping to reduce exposure amid correction fears.
What’s next: All eyes are on Nvidia’s quarterly results, slated to arrive after the bell. The company’s earnings are seen as a crucial test for the broader AI trade that has driven the bull market in stocks.
