Nvidia's report failed to support the markets, with the S&P 500 and Nasdaq losing more than 1%

America's broad stock market S&P 500 returned to negative territory on Thursday, February 26, as investors evaluated the Nvidia and Salesforce reports and reallocated funds to other market segments, CNBC writes. The day before, on February 25, the S&P 500 and Nasdaq hit two-week highs before Nvidia's report.

However, in the first trading session after the release of quarterly results of the world's most expensive company - Nvidia - the S&P 500 fell by 1%, the technology index Nasdaq Composite was losing more than 1.7% at the moment. The Dow Jones Industrial Average fell 209 points, or 0.4%.

Nvidia 's shares also fell 4.8% in trading on February 26, despite the fact that the chip maker beat expectations on profit and revenue for the fourth quarter in a report published the day before. Nvidia's results also affected the company's competitors - Broadcom 's shares fell 6.5% on February 26, AMD's securities fell almost 3.7%. Barron's notes that the three chip makers often move in sync following the release of Nvidia's reports. According to Dow Jones Market Data, AMD and Broadcom shares have declined in four of the last five instances when Nvidia's stock fell the day after the report.

Salesforce 's stock, meanwhile, rose 3% after posting quarterly results that were better than forecasts for both revenue and earnings. However, growth is likely to be limited by the company's weak revenue outlook for fiscal 2027, CNBC points out. "Salesforce's reporting was solid, but the weak outlook doesn't help restore confidence in the software sector," the channel quoted Main Street Research chief investment officer James Demmert as saying. - The company faces a challenging period on the back of AI developments, but in our view, the recent drop in industry quotes looks excessive."

The current sell-off probably reflects the general market mood more than Nvidia's actual results, Barron's writes. Bloomberg notes that the subdued investor reaction to the report of the world's most expensive company reflects continued uncertainty about the prospects for AI development. After rapid growth in recent years, Nvidia shares have lost momentum amid questions about large-scale spending on the development of artificial intelligence. In parallel, traders are exiting sectors that are considered potentially vulnerable to AI transformation, the agency points out.

The lack of euphoria following Nvidia's release of revenue, net income and forecast results - well above expectations - is because the company rarely disappoints on these metrics, says Hardika Singh of Fundstrat Global Advisors. "However, the company failed to mitigate investor concerns about narrowing its competitive advantage in the rapidly changing world of computing, and failed to present a compelling plan for how it intends to deal with an AI transformation that could upend industries ranging from cybersecurity and food delivery to banks," she said.

The day after the quarterly report was published, Nvidia's securities fell 5.6% to $184.66 a piece at the moment, showing the biggest percentage drop in a day since April 2025, Barron's pointed out. Analysts, however, are nonetheless positive about the company's prospects.

"There is no reason to doubt the demand for computing power against the backdrop of accelerating progress in AI," says D.A. Davidson analyst Gil Luria (his opinion is cited by Barron's). He maintained his recommendation to buy the company's shares with a target price of $250. His target assumes growth of securities by 27.6% relative to the last closing price.

In addition, KeyBanc analyst John Wine said Nvidia's sales forecast for the current quarter was "comfortably above expectations." He also noted a 75% jump in the company's data center segment revenue, which was well above Wall Street estimates. Vin maintained a buy recommendation on Nvidia's stock (Overweight rating) with a target price of $275. This implies a 40% increase in the company's stock relative to its last closing price.

Overall, of the 74 analysts covering Nvidia shares, a majority - 68 - recommend buying them, MarketWatch data shows. Five are cautious and advise holding them in a portfolio. Only one advises selling. Analysts' average target price for the company's stock is at $261 apiece, suggesting Nvidia shares are up 33% from their last close.

This article was AI-translated and verified by a human editor