NEW YORK – Markets displayed mixed signals on Thursday, August 28, 2025, as investors digested NVIDIA Corporation,
‘’’: s (NASDAQ: NVDA) latest earnings report, which delivered strong revenue growth but fell short of sky-high expectations in key segments. The semiconductor giant’s results sent ripples through technology stocks and broader market indices, highlighting the continued influence of artificial intelligence leaders on market sentiment.
Market Overview: Mixed Performance Amid Nvidia Uncertainty
The major indices showed divergent paths in Thursday trading, with the S&P 500 reaching new intraday highs before settling little changed at 6,483.92, up 0.04%. The technology-heavy NASDAQ Composite gained 0.29% to close at 21,652.50, while the Dow Jones Industrial Average declined 0.19% to 45,476.56.
The VIX volatility index dropped 2.63% to 14.46, suggesting reduced market anxiety despite the mixed earnings reception. Gold prices surged 0.61% to $3,469.70 per ounce, reflecting continued safe-haven demand amid geopolitical tensions and Federal Reserve uncertainty.
Nvidia’s Mixed Earnings Report Dominates Headlines
NVIDIA Corporation reported second-quarter fiscal 2026 results that beat overall expectations but revealed concerning trends in its crucial data center business. The company posted adjusted earnings of $1.05 per share on revenue of $46.74 billion, surpassing analyst estimates of $1.01 per share and $46.06 billion in revenue.
However, data center revenue of $41.1 billion, while representing a remarkable 56% year-over-year increase, fell slightly short of the FactSet consensus estimate of $41.34 billion. This marked the second consecutive quarter where the segment missed expectations, raising questions about the sustainability of AI infrastructure spending growth.
“The core growth outside of China was really good,” noted Ben Reitzes, head of technology research at Melius Research, speaking on CNBC’s Squawk Box. “There should be more great growth in the fourth quarter, so I think we’re all systems go.”
China Factor Weighs on Guidance
Critically, NVIDIA’s third-quarter revenue guidance of $54 billion, while above the $53.1 billion analyst consensus, notably excludes any potential sales of H20 processors to Chinese customers. The company released $180 million worth of inventory to a non-Chinese client during the quarter, highlighting the ongoing impact of U.S.-China trade restrictions on the semiconductor sector.
“They didn’t include China in their guide, and some people were hoping there were some China sales in there,” Reitzes explained, suggesting that any resolution of trade tensions could provide significant upside to the company’s forecasts.
Retail Earnings Provide Market Bright Spots
Dollar General Corporation (NYSE: DG) emerged as a standout performer, surging over 5% after reporting second-quarter earnings of $1.86 per share on revenue of $10.73 billion, significantly beating analyst expectations of $1.57 per share and $10.69 billion in revenue. The discount retailer also raised its full-year guidance, signaling confidence in consumer spending patterns among lower-income demographics.
Conversely, Best Buy Co., Inc. (NYSE: BBY) posted mixed results, with adjusted earnings of $1.28 per share on $9.44 billion in revenue beating estimates. However, the consumer electronics retailer maintained cautious full-year guidance, citing “uncertainty of potential tariff impacts” from the Trump administration’s trade policies.
Federal Reserve Drama Adds Political Uncertainty
Markets largely shrugged off escalating tensions between the Trump administration and the Federal Reserve, as Governor Lisa Cook filed a federal lawsuit challenging President Trump’s attempt to fire her from the central bank’s board of governors.
The unprecedented legal challenge, filed in federal court in Washington, D.C., names Fed Chairman Jerome Powell and the board of governors as defendants. Cook’s attorney, Abbe Lowell, described the firing attempt as “unprecedented and illegal.”
Economic Data Shows Resilient Growth
Supporting the market’s underlying strength, the Bureau of Economic Analysis revised second-quarter GDP growth upward to 3.3% annualized, exceeding both the initial estimate of 3.0% and consensus forecasts of 3.1%. The revision reflects stronger business investment and consumer spending than initially reported.
Meanwhile, initial jobless claims fell to 229,000 for the week ending August 23, down 5,000 from the previous period and near the Dow Jones estimate. Continuing claims dropped by 7,000 to 1.95 million, suggesting employers remain reluctant to reduce workforce levels despite economic uncertainties.
Sector Rotation Continues Amid Tech Uncertainty
The mixed reception to NVIDIA’s results appeared to accelerate an ongoing rotation away from mega-cap technology stocks toward other market sectors. Vital Knowledge’s Adam Crisafulli noted that “rather than trigger a slump in the market overall, Nvidia should help encourage an ongoing rotation out of mega-cap tech/momentum stocks and into some of the more unloved parts of the market.”
This rotation was evident in the relative outperformance of the Russell 2000 small-cap index, which declined only 0.03% compared to larger losses in technology-heavy indices.
AI Trade Resilience Despite Nvidia Concerns
Despite initial concerns about NVIDIA’s data center performance, several AI-related stocks demonstrated resilience. Snowflake Inc. (NYSE: SNOW) surged 19% after reporting second-quarter earnings of 35 cents per share on revenue of $1.14 billion, both exceeding analyst expectations.
Broadcom Inc. (NASDAQ: AVGO) and Micron Technology, Inc. (NASDAQ: MU) both gained approximately 2%, suggesting investor confidence in the broader semiconductor ecosystem remains intact.
Analyst Upgrades Support Nvidia Long-Term Outlook
Despite the initial market reaction, several major Wall Street firms raised their price targets on NVIDIA following the earnings report. JPMorgan Chase & Co., Citigroup Inc., and Bernstein Research all increased their target prices, citing the company’s continued dominance in AI infrastructure and strong long-term growth prospects.
“The company is still growing over 50% on their guidance at a $50B quarterly revenue run rate – that’s remarkable, even for the current valuation,” said David Wagner, head of equity at Aptus Capital Advisors.
Looking Ahead: Inflation Data and Fed Policy
Investors now turn their attention to Friday’s release of the Personal Consumption Expenditures (PCE) price index for July. Economists surveyed by Dow Jones forecast a 0.2% monthly increase and 2.6% annual rise, key metrics that will influence Federal Reserve policy decisions amid the ongoing political tensions.
The inflation data comes as markets grapple with uncertainty surrounding Fed independence and the potential impact of the Trump administration’s aggressive tariff policies on consumer prices and corporate earnings.
Market Outlook: Cautious Optimism Amid Uncertainty
As trading concluded Thursday, market participants expressed cautious optimism about the underlying economic fundamentals while acknowledging significant headwinds from geopolitical tensions, trade policy uncertainty, and questions about the sustainability of AI investment growth.
The S&P 500’s ability to reach new highs despite mixed earnings results suggests underlying market resilience, though the narrow leadership from technology stocks continues to face scrutiny. With the index up more than 10% year-to-date and the NASDAQ gaining over 2% in August alone, investors remain focused on whether the current market leadership can broaden beyond the mega-cap technology sector.
Friday’s inflation data and next week’s additional economic releases will provide crucial insights into the Federal Reserve’s policy trajectory and the broader economic outlook as markets navigate an increasingly complex political and economic landscape.
