Technology stocks experienced a rollercoaster day Tuesday as artificial intelligence developments continue to create winners and losers across the market.
Software companies saw gains after AI laboratory Anthropic unveiled new capabilities, but this time investors focused on potential partnerships rather than viewing AI as a competitive threat. This marked a shift from recent weeks when AI announcements typically sent software stocks tumbling.
However, not all companies benefited from the renewed optimism. Workday, which provides human resources software, dropped 10% after releasing disappointing revenue projections. The decline was worsened by the fact that HR functions were specifically mentioned as targets for Anthropic’s latest technology.
The mixed reactions highlight ongoing uncertainty about whether traditional software companies can adapt and prosper alongside AI developments, or face displacement by automated alternatives.
Market attention now shifts to tonight’s earnings announcement from Nvidia, currently the world’s most valuable company. Analysts predict the chip manufacturer will report a 64% surge in first-quarter revenue projections, reaching approximately $72 billion.
Despite these impressive growth expectations, Nvidia faces mounting pressure to exceed increasingly high performance standards. The company also confronts growing rivalry from competitors including Alphabet and AMD, while navigating changing Chinese demand amid evolving government restrictions on advanced chip sales.
Although Nvidia shares have gained only 2% this year, options trading suggests investors are preparing for significant post-earnings movement of roughly 5% in either direction. Given the company’s enormous size, such a swing would represent about $230 billion in market value.
Following Tuesday’s 0.77% gain in the S&P 500, futures trading indicated continued upward momentum heading into Wednesday’s session.
Asian markets rallied strongly Wednesday, with investors increasingly recognizing how AI infrastructure spending benefits companies supporting the technology buildout. South Korea’s Kospi index, already up an remarkable 45% this year, climbed another 2%. Japan’s Nikkei advanced 2.2%.
The Japanese market received additional support from yen weakness, which fell to two-week lows after Prime Minister Sanae Takaichi’s Bank of Japan board nominees were characterized as favoring inflationary policies.
Meanwhile, China’s yuan continued strengthening to near three-year highs against the dollar as German Chancellor Friedrich Merz joined other European leaders visiting China this year. The offshore yuan has appreciated 3% over the past month.
President Trump’s State of the Union address Tuesday evening touched on AI themes, with Trump directing major technology companies to construct their own power facilities for data centers. The directive reflects concerns about rising household electricity costs from massive grid demands.
Trump also announced plans for $1,000 contributions to Americans without 401k retirement coverage, funds likely to flow directly into stock market investments.
Looking ahead to Nvidia’s results, the company has exceeded sales forecasts for 13 consecutive quarters, though the margin of those beats has narrowed as competition intensifies and expectations climb higher.
