After-hours surge of 10%! Can NVIDIA be the "savior" of the bleak August for US tech stocks?

The U.S. stock market experienced a "Black August" with the rise of Nvidia.

Overnight, boosted by Nvidia, the Nasdaq 100 index rose by 1.6%. The largest ETF tracking the Nasdaq 100, Invesco QQQ, also rose by 1.58% on the same day.

According to Nvidia's latest earnings report, its revenue and earnings per share (EPS) doubled in the second quarter ending on July 30th, not only reversing the decline in the first quarter but also surpassing Wall Street's expectations by more than 22% and 29% respectively.

Due to strong demand, Nvidia's sales far exceeded expectations, causing its stock price to surge by 10% in after-hours trading.

Under Nvidia's leadership, other chip manufacturers in the U.S. stock market also saw significant gains, with AMD, Broadcom, and Marvell Technology Inc. all rising by more than 3%.

For the U.S. stock market, which had a rough first three weeks, Nvidia's better-than-expected earnings report can be seen as a "shot in the arm".

Previously, after experiencing the best performance in the first half of the year, the Nasdaq 100 index began to decline due to concerns about the threat of an economic recession and high U.S. bond yields.

In the U.S. stock market, energy was the only sector that rose in August, while the technology stocks, which had performed strongly in the first half of the year, became one of the biggest drags on the market. The so-called "Big Seven Tech Giants," including Amazon, Apple, Microsoft, Meta, Nvidia, Tesla, and Google's parent company Alphabet, drove the market rebound in the first seven months of the year, but they all faced setbacks in the first three weeks of August.

Among these seven companies, Apple, the largest in terms of market capitalization, saw its stock price fall by about 10% this month, while Tesla, the worst performer, fell by about 13%.

Analysts believe that Nvidia's performance has temporarily alleviated concerns about the overvaluation of technology stocks. Investing.com Senior Analyst Thomas Monteiro said:

Nvidia's performance shows that the bet on artificial intelligence is paying off today. This is a big deal because it validates the argument that has been supporting tech stocks this year.

Well-known analyst Daniel Ives from Wedbush pointed out:

"Father of Artificial Intelligence" Huang Renxun and Nvidia have delivered their answers in a "home run" manner, while the earnings report and guidance are more like "throwing the microphone, smashing the guitar," pushing the atmosphere of this AI carnival to a climax, which will have a chain effect on the technology sector in the second half of this year.

Daniel believes:

In the midst of the "gold rush" of artificial intelligence, we are witnessing an "unprecedented" demand. The revenue guidance of $16 billion in the third quarter is significantly higher than the consensus value of $12.6 billion. This will ignite the rebound of tech stocks, and the rebound will continue into the second half of this year.

Daniel sees Nvidia's performance as the best barometer for AI spending:

We consider these performance and guidance as a historic moment for the technology industry. The wave of AI spending in the coming years is about to arrive.

We are currently in the research and infrastructure construction stage of artificial intelligence, and it will eventually form a huge spending cycle. Software, digital media, large tech companies, and chip companies will be the main beneficiaries of this spending.