Nvidia Delivers Though Markets Remain Choppy

WHERE WE STAND – Earnings from Nvidia proved to be the main event yesterday, with conviction capped into the release, followed by the chipmaker delivering a solid report.

Q4 adjusted EPS beat expectations, at $0.89 vs. $0.84 est., on better than expected revenues of $39.3bln, compared to the Street forecast of $38.25bln. Meanwhile, guidance accompanying these results, which also saw margins in line with expectations at 73.5%, was solid, with Nvidia foreseeing $43bln (+/-2%) revenue in the first quarter of the next fiscal year.

Clearly, despite NVDA stock trading in choppy fashion after hours, the figures show little sign of the AI euphoria ebbing any time soon, with the chipmaker still able to deliver stellar figures, despite the recent emergence of Deepseek, and the potential for cheaper AI models, trained on older chipsets. Now that the earnings are out of the way, and have been navigated successfully, dip buyers may make themselves more known, particularly with the next notable risk event now not until next Friday’s NFP report.

Away from those NVDA earnings, Wednesday proved a largely subdued day for markets, which by and large lacked any sort of definitive catalyst.

Cash equities ended the day as near as makes no difference unchanged, with participants continuing to mull what is a relatively grim combination for riskier assets, whereby incoming economic data continues to weaken, and policy uncertainty continues to mount, making it something of a tough ask to be buying the dip at this stage, even if I continue to believe that the path of least resistance leads to the upside.

Despite those relatively calm conditions, Treasuries continued to gain ground, likely by virtue of the chunky month-end duration extension, along with the aforementioned economic jitters persisting, with 10-year yields falling another 5bp on the day, and briefly dipping under 4.25%. As noted yesterday, the risk/reward increasingly tilts towards long Treasury positions here, with a more dovish Fed path much easier to envisage than a more hawkish one, even as the USD OIS curve continues to discount more than 50bp of easing by year-end.

Finally, in the FX space, it proved to be another subdued day, with the dollar remaining well within recent ranges, as the DXY trod water around 106.50, and other G10s did little of particular interest. I remain a dollar dip buyer here, though, with the ‘US exceptionalism’ case remaining a solid one, despite recent downside data surprises, along with lingering haven demand. Furthermore, even if the US economy were to be faltering, it remains the ‘cleanest dirty shirt’ in the laundry, given the numerous macro woes being experienced on this side of the Atlantic.

LOOK AHEAD – A busy-ish data docket lies ahead today, as fallout from Nvidia earnings continues.

Plenty of Stateside releases are due, with the 2^nd estimate of Q4 GDP likely the highlight, even if figures are set be unrevised, pointing to growth of 2.3% on an annualised QoQ basis. Naturally, given ongoing jitters over the state of the US economy, any downward revision is likely to be punished here, probably more so than we would typically expect on such data. Also due from the US today are last month’s durable goods orders and pending home sales figures, along with the weekly jobless claims report, where the continuing claims print pertains to the survey week for the February NFP print.

On the policy front, minutes from the January ECB meeting are due, though typically are a turgid read and present little by way of fresh guidance or information. The Fed speaking calendar is a busy one, meanwhile, with Board members Barr and Bowman; 2025 voter Schmid; 2026 voters Harker and Hammack; plus, 2027 voter Barkin, all set to speak.