Stocks slump, Nvidia and Walmart beat: what happened on US markets this week

After having seemed initially to provide US investors with the reassurance they needed, Nvidia saw a reversal in fortunes this week.

Initially surging 5% as earnings beat forecasts the shares ended the 20 November down 3% as concern about valuations and a possible AI bubble took hold once more and the Vix index of volatility surged.

Bitcoin continued to struggle and cryptocurrency platform Coinbase was among the top fallers on Wall Street over the past week. AI play Advanced Micro Devices was another notable loser as it rapidly gave back gains it enjoyed at the start of the week on a well-received analysts day.

Hopes the Federal Reserve might give the markets a boost with a pre-Christmas rate cut are fading after the delayed US jobs number for September came in ahead of expectations. Although a tick higher in the unemployment rate offered a crumb of comfort for those hoping the Fed will act.

Nvidia

A lot was riding on the third-quarter earnings report from AI chipmaker and the world’s largest listed company Nvidia. Though it largely delivered, an initially positive response quickly evaporated as concerns about valuations in the AI space returned.

Unusually, compared with recent history, Nvidia was not heading into this announcement with a supercharged share price after the AI jitters had seen a material retreat from recent record highs.

Amid strong demand for the company’s Blackwell chips, Nvidia’s revenue was up 62% year-on-year to $57 billion in the three months to the end of October – ahead of the $55 billion consensus estimate.

Net income was up 65% year-on-year to $31.9 billion, ahead of the forecast $30 billion. Data centre revenue – essentially Nvidia’s sales of AI chips – was up 66% at $51.2 billion against the $49 billion which had been pencilled in.

Sales forecasts for the fourth quarter also came in higher than anticipated with guidance of $65 billion coming in ahead of the $61.7 billion which analysts were expecting.

Walmart

Retail bellwether Walmart raised its annual forecast for the second quarter in a row on 20 November after third quarter revenues topped analysts’ estimates, driven by strong online sales growth.

Walmart now sees annual net sales growing in a range of 4.8% to 5.1%, up from a prior forecast of 3.75% to 4.75% and adjusted EPS (earnings per share) in a range of $2.58 to $2.63, up from the $2.52 to $2.62 expected earlier.

The big-box retailer also announced a move to the Nasdaq Stock Exchange from the New York Stock exchange, effective from 9 December.

Chief financial officer John Rainey explained: “Moving to Nasdaq aligns with the people-led, tech-powered approach to our long-term strategy.”

In October Walmart unveiled a partnership with ChatGPT owner OpenAI to allow its customers to search for products and check-out instantly.

While the discounter is known for attracting low and middle-income shoppers it is increasingly gaining traction with upper-income consumers due to its larger online selection and home delivery service.

Home Depot

Home improvement company Home Depot missed third-quarter earnings and cut its full-year outlook, sending the shares down 4% on 18 November.

The retailer blamed weaker consumer demand and lower seasonal storm activity which disproportionately impacted spending on higher ticket items such as roofing materials and generators.

The company now expects full-year total comparable sales to increase by around 1% compared with prior guidance of 2.8% and adjusted EPS (earnings per share) to decline by approximately 5% instead of 2% previously.

Third-quarter revenue increased by 2.8% to $41.35 billion, slightly ahead of consensus estimates while adjusted EPS came in at $3.74, missing forecasts for a third consecutive quarter.

Higher interest rates and mortgage costs for home loans continued to have a dampening effect on DIY spending projects as people play a waiting game.

“Our customers tell us that they remain on the sidelines due to uncertainty and perhaps the hesitation to make larger financial commitments amid an uncertain economic environment,’’ said chief financial officer Richard McPhail.