S&P 500 hits record high as Nvidia results lead AI boom

The market has witnessed a notable milestone this week, with the S&P 500, once again, reaching historical highs. This benchmark US index has surpassed the 5090 points mark, reflecting the strong performance of major companies across various sectors.

One of the key drivers behind this ascent has been the outstanding performance of leading technology companies such as Nvidia NASDAQ:NVDA, a leader in chip manufacturing and a pioneer in artificial intelligence.

Closing on February 22, the S&P 500 recorded a 2.1% increase, further solidifying its position in a bull market that has prevailed since the October 2022 downturn. Since then, the index has experienced an impressive 45% surge, signalling a positive trend for long-term investors.

All eyes on Nvidia stock

Despite concerns related to the Federal Reserve’s monetary policy and possible interest rate decreases, investors have overlooked these worries, focusing on the market’s positive performance. This optimistic sentiment was bolstered by Nvidia’s excellent results reported in its fiscal fourth quarter, fuelling confidence in the potential of artificial intelligence and generating a widespread increase in technology stocks.

Nvidia’s stock, in particular, recorded an impressive 16% increase, reaching new historical highs and surpassing $785 per share. This surge came after the company announced fourth-quarter earnings that exceeded market expectations, with revenues of $22.103 billion and earnings per share of $5.16. The company’s optimistic projections for the first quarter also contributed to investor enthusiasm.

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Nvidia results surpassed market expectations

To illustrate the company’s growth and the benefits for its shareholders, for the same quarter in 2023, the artificial intelligence technology firm reported earnings per share of $0.57.

The news of Nvidia’s impressive financial results prompted an immediate market reaction. After-market close, the company’s shares recovered the day and week’s losses and surged more than 7%, reaching the $725 zone compared to the $680 at the session’s opening. This substantial increase in the value of the shares seems to reflect the market’s confidence in Nvidia’s future.

Nvidia’s growth expectations continue to be impressive. The company projects its revenues to reach $24.000 billion and operating expenses to be approximately $3.500 billion. These projections are even more ambitious than the market initially expected, demonstrating Nvidia’s confidence in its ability to continue leading the artificial intelligence and cutting-edge technology market.

It was a massive beat on earnings at $5.16 compared to estimates of $4.60, whilst revenue hit $22.1 billion, higher than the $20.41 expected. Nvidia’s data centre business, the catalyst behind this impressive growth, saw revenue jump by 400% year-over-year, underpinning its status as the golden child of AI.

The big question for investors is, can this continue?

Put simply, yes. Nvidia continues to deliver in every way, and its results show there is still plenty of growth ahead. This isn’t just a flash in the pan, nor a bubble, but a business that continues to make serious cash.

“Fundamentally, the conditions are excellent for continued growth” in 2025 and beyond, Nvidia CEO Jensen Huang said. The one blot on the copy book was China, not that anyone seems to care.

“Data centre sales to China declined significantly in the fourth quarter due to US government licensing requirements,” the company said, with Huang noting that “this last quarter, our business significantly declined as we paused in the marketplace, we stopped shipping in the marketplace. We expect this quarter to be about the same. But after that, hopefully, we can go compete for our business.”

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