Nasdaq opens higher as Nvidia earnings revive AI trade, software stocks jump

US stocks opened higher on Thursday after Nvidia's latest results and outlook renewed investor confidence in the artificial intelligence trade.

The chipmaker's forecast highlighted continued demand for AI computing, helping lift semiconductor and software stocks in premarket trading.

The Nasdaq Composite gained 0.75%. The S&P 500 was up 0.24% while the Dow Jones Industrial Average was down 0.04%.

Nvidia shares jumped 5.59% in trading following its results and forecast.

Nvidia boosts technology stocks

Nvidia's outlook showed continued demand for AI computing, although the company warned that shortages of memory components could limit the pace of industry growth.

The results helped support other semiconductor stocks. Micron Technology and Marvell Technology each gained about 1% in trading, while SanDisk rose slightly more than 2%.

The broader technology sector also advanced.

Salesforce jumped 15% after raising its annual revenue and profit forecasts and introducing a new plug-in integrated with Anthropic's Claude AI models.

CrowdStrike also climbed 15% after raising its annual revenue forecast and exceeding second-quarter earnings expectations.

Other software companies also gained, with ServiceNow rising 6% and Palo Alto Networks advancing 9%.

The strength in software stocks came as stronger earnings from Salesforce and CrowdStrike eased some concerns that advanced AI tools could disrupt traditional software businesses.

The gains also helped narrow the performance gap between software companies and semiconductor stocks, which have been among the main beneficiaries of AI investment.

Nvidia earnings shift focus to AI growth

Nvidia's fiscal second-quarter revenue more than doubled, while the company is projected to achieve 70% revenue growth in fiscal 2028, according to LSEG estimates.

That compares with the 44% growth previously expected by analysts surveyed by LSEG.

The results offered support to the broader AI investment theme after Nvidia had recently faced a pattern of stock declines even when its earnings exceeded expectations.

However, concerns about the sustainability of AI capital spending and the financing arrangements behind some AI investments remain relevant risks for technology stocks.

The gains followed a largely unchanged session for the three major US indexes on Wednesday. Investors were also assessing several individual corporate developments.

Moderna fell 4.9% after announcing a $2 billion convertible bond sale, while HP dropped 8.6% following a decline in PC shipments and margins during its fiscal third quarter.

Dollar General rose 5.6% after increasing its annual comparable-sales forecast.

Markets await Warsh and economic data

With Nvidia's results now released, attention is turning toward the Federal Reserve and broader economic conditions.

Federal Reserve Chair Kevin Warsh is scheduled to deliver his first address at the Jackson Hole symposium on Friday.

Investors are looking for indications about the central bank's approach to inflation and interest rates, as well as its view of recent Treasury efforts to manage borrowing costs.

The July Personal Consumption Expenditures price index came in slightly hotter than expected on Wednesday, complicating the monetary policy outlook.

Kansas City Fed President Jeffrey Schmid has also said current interest rates are not restrictive and indicated support for further rate increases to bring inflation closer to the Fed's target.

Meanwhile, the number of Americans filing new unemployment claims fell to 203,000 in the week ended August 22, below economists' expectations of 208,000.