Unbelievable! Nvidia Stock Skyrockets on Earnings Report - Is Now the Time to Invest in AI Plays?

Dow Jones futures fell slightly overnight, but S&P 500 futures and Nasdaq futures rose as Nvidia ( NVDA ) earnings surged. X The stock market rally pulled back slightly ahead of Nvidia's results, in part due to the Fed's somewhat hawkish minutes from its April 30-May 1 policy meeting. Many consumer and commodity names also sold. Nvidia reported earnings that beat quarterly outlook, steered higher and announced a 10-for-1 stock split. Shares rose sharply. Nvidia's long-awaited report has major implications for AI plays such as Broadcom ( AVGO ), Advanced Micro Devices ( AMD ), Taiwan Semiconductor ( TSM ) and Microsoft ( MSFT ). The shares rose slightly in early after-hours trading. Meanwhile, Synopsys ( SNPS ), Snowflake ( SNOW ) and ELF Beauty ( ELF ) also reported late Wednesday.

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Nvidia and Eli Lilly stock are on IBD Leaderboard . Stock orders are on SwingTrader. "Microsoft and Synopsys Stocks are in IBD's Long-Term Leaders". Nvidia stock is at IBD 50 . Dow Jones Futures Today Dow Jones futures fell 0.2% vs. fair value. S&P 500 futures rose 0.2%. Nasdaq 100 futures rose 0.4%. Nvidia stock is a large component of the S&P 500 and Nasdaq 100. Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.

Nvidia Earnings Nvidia's earnings skyrocketed 461% with revenue surging 262%, the fourth consecutive quarter of triple-digit growth for both. The AI ​​chip leader guided for higher revenue in the second quarter, although not by the same margin as last. “The next industrial revolution has begun,” Nvidia CEO and founder Jensen Huang said in his earnings release. Nvidia will split its shares 10-for-1. The company also increased its dividend by 150% to 10 cents per share, or 1 cent post-split. Nvidia shares rose 6% in overnight trading, marking a move above 1,000 for the first time. Shares rose as executives discussed growth prospects and the company's latest AI chips and projects on a conference call. Shares fell 0.5% in Wednesday's regular session to 949.50. NVDA stock hit a 922.20 cup-with-handle buy point last week.

Super Micro Computer ( SMCI ) and Dell Computer ( DELL ), which both use Nvidia chips in their AI servers, advanced solidly. Microsoft and ServiceNow ( NOW ), two big software AI players, edged up. Other Income Synopsys' earnings fell short while the electronics design software maker provided mostly weak guidance. SNPS shares fell slightly in the extended action. Shares edged up 0.3% to 573.13 on Wednesday. Synopsys stock has a handle buy point of 582.97. Snowflake's earnings missed but its earnings did much better while the data analytics software company also provided strong guidance. SNOW shares rose strongly overnight, but pared early gains. Shares rose 0.4% to 163.34 on Wednesday. 

Snowflake stock is still far from the 52-week high it hit in February. ELF Beauty's earnings were easily beaten once again but the cosmetics maker weakened after raising targets consistently for several quarters. ELF shares rose slightly in extended trading after initially falling more than 10% Shares of the low-priced cosmetics maker fell 2.1% on Wednesday, between its 50-day and 200-day lines. Stock Market Rally The stock market rally led to moderate declines in major indices and a number of leaders suffered bigger losses. 

The Dow Jones Industrial Average fell 0.7% in stock market trading Wednesday. The S&P 500 index slipped 0.3%. The Nasdaq Composite fell 0.2%, reversing from a new intraday all-time high. The small-cap Russell 2000 lost 0.8%. Consumer stocks struggled on Wednesday. Target ( TGT ) sold off on weak earnings and guidance, but Urban Outfitters ( URBN ), Williams-Sonoma ( WSM ) and luxury homebuilder Toll Brothers ( TOL ) turned sharply lower despite seemingly solid results. Energy and commodity stocks weakened. Copper sale prices fell 4.9%, the biggest drop in almost two years, following big increases. U.S. crude oil futures fell 1.4% to $77.57 a barrel, down 3.1% so far this week. The 10-year Treasury yield rose 2 basis points to 4.43%.

The Fed's minutes from its April 30-May 1 meeting released on Wednesday showed policymakers worried about failing progress in lowering inflation. However, since May 1, new inflation and economic data show a decline in inflation again. Fed Governor Christopher Waller, a policy hawk, noted improvement on Tuesday.

ETFs

In growth among ETFs, the iShares Expanded Tech-Software Sector ETF ( IGV ) was essentially flat, with large Microsoft and ServiceNow components. The VanEck Vector Semiconductor ETF ( SMH ) rose 0.8%. Nvidia stock is the No. 1 stock 1 in SMH, with Broadcom, AMD, and big member TSM shares as well. SNPS stock is in SMH and IGV.

Reflecting a more speculative stock story, ARK Innovation ETF ( ARKK ) fell 0.5% and ARK Genomics ETF ( ARKG ) rose 1%.

SPDR S&P Metals & Mining ETF (XME) fell 2.4%. SPDR S&P Homebuilders ETF ( XHB ) fell 2.3%. The Energy Select SPDR ETF ( XLE ) fell 1.85% and the Health Care Select Sector SPDR Fund ( XLV ) rose 0.2%.

The Industrial Select Sector SPDR Fund ( XLI ) edged up 0.1%. The Financial Select SPDR ETF (XLF) fell 0.6%.

What to do now Nvidia's earnings are finally out. Are you ready? If the market reacts positively to Nvidia's results, there could be some buying opportunities on Thursday and in the days ahead. But a downward reversal could trigger a massive sell-off. With the recent hit to consumer sectors, commodities, and some infrastructure, the market rally will not be able to see AI's weakness. So investors need to be prepared. Prepare your watch list, with special attention to your main targets. But also prepare your exit strategy. Read the Big Picture every day to stay in sync with market direction and leading stocks and sectors.

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