CNBC Daily Open: Expectations can be an irrational thing. Just look at Nvidia

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Markets digest Nvidia earnings 
U.S. markets rose on Thursday after digesting Nvidia’s earnings release. Its shares rose just 0.5%. Alphabet slumped 4.7% on the U.S. Department of Justice calling for Google to divest Chrome.  The pan-European Stoxx 600 added 0.41%, ending a four-day losing streak. British sports retailer JD Sports plunged 15.5% after warning about its annual profit. 

Bitcoin inches towards $100,000 
Bitcoin broke the $99,000 barrier on Thursday before retreating to around $98,600. The cryptocurrency has been on fire since Donald Trump won the election because of his perceived crypto-friendly stance. Galaxy Digital CEO Michael Novogratz thinks it’s “inevitable” bitcoin will cross the $100,000 milestone, but “there will be a correction.” 

Fed might incur Trump’s ire 
There are signs that the U.S. disinflation process is slowing. Couple that with Trump’s planned policies, which are seen as inflationary, and the U.S. Federal Reserve might decide to keep interest rates unchanged. That, in turn, could anger Trump, who berated Fed officials during his first term in office for not relaxing monetary policy quickly enough.  

No Bluesky for billionaires 
Bluesky has risen in popularity in tandem with Elon Musk’s ascending prominence in U.S. politics. That might put the social media platform, which functions like Musk’s X and Meta’s Threads, in the crosshairs of acquirers. But Bluesky is “billionaire proof,” CEO Jay Graber told CNBC. “If someone bought or if the Bluesky company went down, everything is open source.” 

[PRO] Focus on Nvidia’s Blackwell 
Despite Nvidia’s revenue growth rising at a slower pace each subsequent quarter, analysts are still optimistic on the stock. Many even raised their price target for Nvidia because of the chipmaker’s next-generation Blackwell chip, which is in such hot demand that supply is struggling to meet it, according to Nvidia Chief Financial Officer Colette Kress.  

With Nvidia’s earnings out of the way, markets can return to a semblance of regular programming after a month of frenzy that included the U.S. presidential elections, the Fed bringing rates down by 25 basis points, Russia ratcheting up its nuclear rhetoric, to mention just a few events. 

U.S. markets took everything in their stride and took a few steady steps forward on Thursday. The S&P 500 rose 0.53%, the Dow Jones Industrial Average climbed 1.06% and the Nasdaq Composite was mostly flat. 

“I think markets are finally finding their footing for two reasons: One is recovery from that postelection hangover after the first week, and [two is] reaction to Nvidia’s earnings,” Nuveen CIO Saira Malik told CNBC. 

Nvidia reported an incredible – by most standards – third-quarter financial report. Its revenue almost doubled year on year and net income soared. 

But we know already investors’ bar for Nvidia is somewhere beyond the stratosphere. Impressive as Nvidia’s earnings are, investors were still put off by a combination of the chipmaker’s slowing rate of growth and a relatively conservative projection for its sales ahead. 

Nvidia shares ticked up just 0.5% after falling in premarket trading. 

By way of comparison, let’s look at data analytics software Snowflake. Its fiscal third-quarter revenue rose 28% year on year (remember that Nvidia’s jumped 94%) and the company’s net loss widened. But investors were so pumped they pushed up its stock 32.7% to give Snowflake its best day ever. 

That discrepancy might seem baffling. But it’s not unusual for the markets, where expectations dictate share movements.  

If investors expect a company to make a huge loss and it manages to make a dollar in profit, shares are likely to rise. An exaggeration, but still. That’s just regular programming for markets. 

— CNBC’s Jesse Pound, Samantha Subin and Alex Harring contributed to this report.