In this photo illustration, the Nvidia logo is displayed on the smartphone screen and background.
Rafael Enrique | SOPA Images | Lightrocket | Getty Images
This report comes from today's issue of our new international markets newsletter, the CNBC Daily Open. The CNBC Daily Open provides investors with everything they need to know, wherever they are. Like what you see? You can subscribe here.
Nvidia soars, results exceed expectations
Nvidia's stock rose more than 7% in after-hours trading, topping $1,000 for the first time after first-quarter profits and revenue beat analysts' expectations. The company expects second-quarter sales to be $28 billion, compared to the previously expected $26.6 billion. The company plans to split its stock 10:1.
Wall Street falls on inflation concerns
The Dow Jones Industrial Average fell more than 200 points, its worst day so far this month, as minutes from the Federal Reserve's latest meeting stoked fears of persistent inflation. The S&P 500 and Nasdaq Composite also fell. Treasury yields inched higher as prospects for a rate cut became more remote. Oil prices fell for a third straight day ahead of the Organization of the Petroleum Exporting Countries meeting.
Federal Reserve's inflation concerns
Minutes from the Federal Reserve's most recent interest rate setting meeting showed the central bank was concerned about a “lack of progress” in moving inflation closer to its 2% target. The minutes also revealed that “several participants stated they were prepared to further tighten policy if inflation risks materialized and such action became appropriate.” Fed policymakers kept the benchmark borrowing rate in a range of 5.25% to 5.5%.
Dimon: US could have a 'hard landing'
Jamie Dimon, CEO of JPMorgan Chase, said the US economy could experience a “hard landing,” with the worst outcome being “stagflation.” When asked by CNBC's Sri Jegarajah about the possibility of a hard landing, Dimon responded, “Is it possible that we could actually have a hard landing? Of course, if we learn from history, who can tell us that it's not possible?”
Asia-Pacific markets are mixed
Losses were led by Hong Kong's Hang Seng as data center operator GDS Holdings posted a net loss; its shares slid 12%. Mainland China's CSI 300 index fell 0.9%. Japan's Nikkei rose 1.1% as manufacturing activity expanded for the first time in a year and services continued to grow in May. South Korea's Kospi rose 0.3% after the Bank of Korea kept interest rates unchanged at 3.5% as expected. Australia's S&P/ASX 200 fell 0.4% as business activity growth fell to a three-month low.
[PRO] Discreet AI play
According to Goldman Sachs, hedge funds are increasing their investments in lesser-known companies that will benefit from the artificial intelligence boom, while decreasing their investments in giant companies. The Wall Street investment bank analyzed the holdings of 707 hedge funds with total stock holdings of $2.7 trillion as of the beginning of the second quarter.
After the market closed on Wednesday, there were two big announcements. Prime Minister Rishi Sunak of Britain, the world's sixth-largest economy with a GDP of about $3 trillion, called for a general election, but this had little impact on markets. The pound remained almost unchanged. Second, Nvidia, a 31-year-old graphics chip maker with a market capitalization of $2.3 trillion, announced long-awaited profits, sending its stock price soaring to an all-time high..
The stock price was expected to fluctuate by $200 billion depending on the company's performance. In after-hours trading, the stock was up more than 7%. Nvidia's shares are up 92% this year and 200% in the past 12 months. Nvidia is foundational to the artificial intelligence revolution, with Google, Amazon, Meta and Microsoft spending an estimated $200 billion to acquire the company's AI chips.
“The next industrial revolution has begun,” CEO Jensen Huang said in a statement. “We are poised for the next wave of growth.”
Dan Niles, founder of Niles Investment Management, likens Nvidia to Cisco in the 1990s. Cisco was the go-to company for internet equipment. From 1994 to its peak in 2000, Cisco's stock price rose 4,000%. Niles believes Nvidia will go through a similar cycle.
“We're still in the early stages of building AI,” Niles told CNBC's “Money Matters” on Monday. “Over the next three to four years, revenues will increase three to four times what they are today, and stock prices will rise accordingly.”
“If you look at building AI today, who is actually driving it?” Niles said. “The most profitable companies on the planet are Microsoft, Google, and Meta, and they're the ones driving this.”
Importantly, Nvidia now expects second-quarter sales to surge to $28 billion, ahead of analysts' expectations of $26.6 billion, despite the prospect of increased competition from Advanced Micro Devices and Google, which are building their own custom chips, Piper Sandler analysts predict. Nvidia plans to retain at least 75% of the AI accelerator market.
Nvidia did everything it was asked to do. Now it's Wall Street's turn to decide whether to achieve another milestone or consolidate.
—CNBC's Kiff Leswing, Jeff Cox, Kate Rooney, Hakyung Kim, Lisa Kailia Han, Yun Lee and Rohan Goswami contributed to this report.
