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Nvidia's blowout results, OpenAI-News Corp content deal - what's moving markets

Published 2024/05/23, 09:52
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Investing.com -- U.S. futures move higher, with traders assessing the implications of a fresh quarter of soaring returns from artificial intelligence-darling Nvidia (NASDAQ:NVDA). The semiconductor group's revenue spikes by 262% and Chief Executive Jensen Huang hints that the figure will be further boosted by this year by the upcoming launch of its newest line of AI chips. Elsewhere, OpenAI strikes its a content sharing deal with News Corp (NASDAQ:NWSA), its latest such agreement with a major news publisher.

1. Futures rise following blockbuster Nvidia results

U.S. stock futures pointed higher on Thursday, as investors digested yet another blowout quarterly earnings release from artificial intelligence chipmaker Nvidia.

By 03:43 ET (07:43 GMT), the S&P 500 futures contract had gained 27 points or 0.5%, Nasdaq 100 futures had inched up by 158 points or 0.8%, and Dow futures had climbed by 30 points or 0.1%.

The main indices ended the previous session in the red, weighed down by minutes from the Federal Reserve's latest meeting that showed policymakers at the U.S. central bank believe inflation will only ease slowly back down to their 2% target. Although recent economic data have hinted at a cooldown in price pressures, several Fed officials this week have also said that they still would like to see more evidence that the decline is sustainable before rolling out any potential interest rate cuts.

Wagers that the Fed will slash rates by at least 25 basis points as soon as September dipped slightly, according to CME Group's (NASDAQ:CME) closely-monitored FedWatch Tool.

2. Nvidia's latest blowout returns

Shares in Nvidia gained more than 6% in extended hours trading after the semiconductor group's much-anticipated first-quarter results soared and its chief executive touted skyrocketing demand for its upcoming AI-optimized chip.

Revenue in the three months to April 30 soared by 262% from a year ago to $26 billion, beating Wall Street estimates of $24.7 billion. In the current quarter, Nvidia expects to the top-line figure to continue growing to $28 billion. Analysts had pencilled in a quarterly forecast of $26.8 billion.

Data center revenue, which roughly reflects the performance of its AI chips, spiked by 427% year-on-year to a record $22.6 billion. Nvidia's data center graphics processing units have become essential parts of the computing power undergirding generative AI products.

"The next industrial revolution has begun," CEO Jensen Huang said in a statement. "AI will bring significant productivity gains to nearly every industry and help companies be more cost- and energy-efficient, while expanding revenue opportunities."

Huang later told investors that the company will be boosted by "a lot" of revenue this year from its Blackwell line of chips, hinting that there will be no let-up in AI demand.

The prospected of a sustained boom bolstered Nvidia's Asian suppliers, including memory chip manufacturers SK Hynix and Samsung Electronics (KS:005930), as well as contract semiconductor firm TSMC.

3. OpenAI, News Corp sign content sharing deal

News Corp's A shares jumped in extended hours trade after the media giant and OpenAI had signed a deal granting the ChatGPT-maker access to some of its biggest publications.

Under the deal, OpenAI will be given access to new and archived content from several publications, including The Wall Street Journal, The Times,The New York Post and Marketwatch.

The two did not announce any financial details of the agreement. But The Wall Street Journal, which is owned by News Corp, said the deal was valued at over $250 million over the span of five years.

Microsoft-backed OpenAI has been pushing to shore up ties with several major media outlets, including the Financial Times, as it hunts for content to train its flagship AI models.

Still, OpenAI has also drawn scrutiny over its allegedly unauthorized usage of data to train its models. The New York Times sued the company in late-2023, accusing it of copyright infringement.

4. DOJ to seek breakup of Live Nation and Ticketmaster - reports

Shares of Live Nation Entertainment (NYSE:NYSE:LYV) sank in after hours trade on Wednesday on reports that the U.S. Department of Justice was planning to sue the Ticketmaster-parent over antitrust violations.

The DOJ and a group of states were preparing the lawsuit, which could be filed in the Southern District of New York as soon as Thursday, Bloomberg News reported, citing people close to the matter.

Live Nation shares sank as much as 9.3% to $92 after the report, although they have since pared back some of those losses.

The lawsuit is set to bring up multiple antitrust violations by Ticketmaster over its seemingly unrivaled hold on concert ticket sales, the report said. The claim will seek remediation, with a break-up of Live Nation and Ticketmaster being a point of focus.

5. Crude slips

Crude prices fell marginally, dropping for the fourth consecutive session, as the Fed minutes pointed to U.S. interest rates remaining at elevated levels for some time.

By 03:43 ET, the U.S. crude futures (WTI) traded 0.1% lower at $77.47 per barrel, while the Brent contract dropped 0.1% to $81.86 a barrel.

Higher interest rates increase borrowing costs, possibly placing a crimp on economic growth and oil demand in the world's largest crude consuming nation.

Also denting sentiment were U.S. crude stocks, which rose by 1.8 million barrels last week, according to the Energy Information Administration. Analysts had estimated a 2.5 million-barrel draw.

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