Stocks Rally as Nvidia Eases AI Bubble Concerns

Stocks climbed on Wednesday, and equity-index futures pointed to additional gains after Nvidia Corp.’s strong earnings outlook helped calm fears that the artificial intelligence boom is becoming overheated.

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Nvidia shares surged more than 5% in after-hours trading following a revenue forecast that topped Wall Street expectations, pulling other AI-linked names higher. Futures tied to the S&P 500 advanced 1.2%, while Nasdaq 100 contracts jumped 1.7%, reflecting renewed appetite for risk assets after a week of volatility triggered by concerns about excessive AI exuberance. Alphabet Inc. also rallied sharply as early reviews praised the newest version of its Gemini AI model.

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Asian markets joined the upswing. Japan’s Nikkei 225 leapt 3.7%, and South Korea’s Kospi one of the standout beneficiaries of this year’s AI wave climbed 2.5%. Bitcoin pushed above $92,000 as overall sentiment brightened.

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Meanwhile, the US dollar held on to its recent gains after logging its strongest daily performance since late September. Treasury yields steadied following a slight increase in the prior session, as traders scaled back expectations for a Federal Reserve rate cut amid a still-uncertain labor-market backdrop.

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Nvidia’s upbeat report offered a much-needed breather for technology stocks, which have endured several weeks of heavy selling as investors fretted over stretched valuations and diminishing odds of near-term policy easing. With sentiment still delicate and scrutiny around corporate tech budgets intensifying, the market’s interpretation of Nvidia’s results is particularly significant.

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“Relief is probably the word that describes the mood,” said Matthew Haupt, portfolio manager at Wilson Asset Management in Sydney. “We really needed something to interrupt the downward momentum in equities, and Nvidia delivered exactly that.”

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Investors are also focused on the evolving outlook for US interest rates. Traders have nearly abandoned expectations of a December Fed rate cut after the Bureau of Labor Statistics announced it will not publish an October employment report, opting instead to roll the data into November’s release which will arrive after the Fed’s final meeting of 2025.

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The absence of a key monthly jobs report leaves Fed officials without critical information heading into their last policy gathering of the year. That uncertainty pushed traders to further reduce the probability of a quarter-point cut, with market pricing now indicating that policymakers are likely to hold rates steady in the 3.75% to 4% range.

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“This data blackout only deepens the divisions already present within the Fed and increases the chances that they remain on hold at the December FOMC meeting,” wrote Tony Sycamore, strategist at IG Markets.

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Minutes from the Fed’s October meeting, released just ahead of the September employment update, showed that many central bank officials believe it would be appropriate to keep rates unchanged through the end of 2025.

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“There’s clearly no unified view at the Fed,” said David Russell of TradeStation. “With policymakers effectively flying blind, the tone of these minutes leans more hawkish than not.”

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In Japan, Finance Minister Satsuki Katayama said she met with Bank of Japan Governor Kazuo Ueda and Growth Strategy Minister Minoru Kiuchi to reaffirm their shared commitment to monitoring financial markets and pushing forward with policies aimed at ending deflation and supporting sustainable growth.

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Back in global equities, markets are attempting to stabilize after a punishing stretch that dragged a broad index of world stocks to its lowest level in a month.

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Major Wall Street figures have been sounding warnings as well. Goldman Sachs President John Waldron told investors that the technical setup points to “more protection and more downside.” Bob Diamond, head of Atlas Merchant Capital, characterized the recent turbulence as a “healthy correction.”

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In this environment, Nvidia’s results carried even greater weight, offering traders a snapshot of how durable AI spending may be heading into 2025.

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The company projected roughly $65 billion in sales for its fiscal fourth quarter, which runs through January comfortably above the consensus estimate of $62 billion. Some analysts had even floated targets as high as $75 billion, underscoring the wide range of expectations surrounding AI-related demand.

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“Compute demand keeps accelerating,” Chief Executive Officer Jensen Huang said in the release. “AI is going everywhere, doing everything, all at once.”

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