Investors greeted Nvidia's latest quarterly results with a muted response, underscoring how lofty expectations have recalibrated market reactions to the semiconductor giant. The company disclosed January-quarter sales that exceeded analysts' estimates and provided a revenue forecast for the current quarter that was above market projections. Yet after an initial after-hours uptick, the stock finished essentially flat as investors appeared to have been seeking an even larger surprise.
The reaction reflects the high bar Nvidia has set: the chipmaker had posted consecutive quarters of notable revenue beats for 14 periods running. Against that backdrop, the most recent outcome, while clearly positive, did not generate the kind of market-moving shock some had hoped for. Still, the results did enough to push immediate worries about AI-driven disruption and the costs associated with wide-scale adoption to the background for the moment.
Markets across Asia responded positively on Thursday, staging a relief rally following the results, even as U.S. and European futures traded lower. The AI trade has prompted alternating waves of enthusiasm and caution among investors in recent weeks. Many remain anxious about returns on AI-related capital allocation and the potential for AI to displace established business models, yet few want to miss any upside. Analysts noted that the AI boom is unlikely to act as a universal catalyst for all stocks in the way some earlier narratives suggested.
Geopolitical developments continued to weigh on market sentiment. U.S. and Iranian negotiators were scheduled to meet in Geneva later on Thursday for their third round of talks this year concerning Iran's nuclear activities. At the same time, the United States has amassed one of its largest military deployments in the Middle East amid preparations for possible strikes against the Islamic Republic.
U.S. President Donald Trump outlined a rationale for potential action against Iran in his State of the Union address earlier this week, framing diplomacy as his preference while saying he would not permit Tehran to acquire a nuclear weapon. Iran has maintained that its nuclear activities are intended for civilian energy production. That U.S. rhetoric contributed to elevated oil prices on Thursday as investors fretted about the risk of supply disruption if conflict were to erupt.
Currency markets also saw renewed focus, particularly on the yen. The Japanese currency hovered near a two-week low after the government named two academics to the Bank of Japan's board who are viewed by markets as strong proponents of economic stimulus. Market participants were surprised by the nominations, which many interpreted as signaling Prime Minister Sanae Takaichi's preference for easier monetary policy and that called into question the prospects for further BOJ rate increases.
The yen found some support later in the session after a report in the Yomiuri newspaper said BOJ Governor Kazuo Ueda left open the possibility of a near-term rate hike. Additionally, board member Hajime Takata, described as hawkish, advocated for gradual policy tightening. Those comments helped temper downward pressure on the currency.
Traders were also watching a short list of key developments that could influence markets on Thursday, including the U.S.-Iran talks and the U.S. weekly jobless claims. Those items were expected to inform risk sentiment and economic expectations as markets digested corporate results and geopolitical headlines.
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