Update Equities: Nvidia earnings rescue markets from AI valuation concerns
Equity markets saw sharp swings this week, starting with a broad selloff and ending with a tech-led rebound after Nvidia’s earnings on Wednesday.
The S&P 500 fell for four straight sessions through Tuesday, its longest slide since August, down 1.4% for the week until Nvidia’s results. Europe’s STOXX 600 dropped nearly 4% by midweek as investors questioned lofty AI valuations, wiping out roughly USD 1.6 trillion globally.
Concerns eased after Nvidia posted earnings and guidance well above expectations. Shares jumped 5% after hours, lifting the tech sector and sparking rallies across Asia on Thursday. Japan’s Nikkei up as much as 4.2% and the MSCI Asia Pacific Index marking its biggest gain in three weeks.
Corporate headlines extended beyond Nvidia’s earnings. Palo Alto Networks announced a USD 3.35 billion acquisition of Chronosphere to strengthen AI-enabled cybersecurity, raised its revenue outlook to USD 10.50–10.54 billion and partnered with IBM on quantum-safe security.
In the coatings industry, Akzo Nobel agreed to merge with Axalta Coating Systems in a USD 9.2 billion all-stock deal, creating a USD 17 billion revenue leader with USD 600 million in expected cost savings and efficiency gains. Akzo Nobel will exit the Dutch AEX index, though its headquarters remain in Amsterdam.
Medtronic delivered strong Q2 results, with revenue up 6.6% to USD 8.96 billion, and raised full-year guidance to 5.5% organic growth. Home Depot trimmed its outlook amid consumer uncertainty, weak housing, and tariff risks, citing a slowdown in sales of high-priced items.
Aerospace also made headlines at the Dubai Air Show, where Airbus secured orders for about 200 aircraft, mainly A321neos, while Boeing booked 166 planes, including 777s and 737 MAX models.
This week showed markets’ reliance on tech heavyweights, especially the Magnificent Seven. The turnaround from a broad selloff to a tech-led rally illustrates how much investor sentiment hinges on AI-related earnings. It also raises questions over whether current valuations reflect sustainable fundamentals or are drifting into speculative territory. At the same time, robust M&A activity and solid operational performance across sectors signal that companies are still focused on growth and efficiency beyond the tech sector.
