NextFin News - U.S. stocks finished essentially flat Wednesday as investors held their positions ahead of a wave of after-the-bell earnings, headlined by Nvidia. A slightly hotter-than-expected July PCE inflation reading weighed on sentiment early in the session, while Meta Platforms drew attention after agreeing to a multibillion-dollar settlement with state attorneys general over child-safety allegations. The real story of the day unfolded after the close: both Nvidia and Salesforce delivered beat-and-raise quarters that sent their shares sharply higher in extended trading, with Nvidia's stock reversing an initial post-earnings decline during the call itself and Salesforce posting one of the largest EPS beats from a mega-cap software company in recent memory.
The Dow Jones Industrial Average fell 0.21% The S&P 500 Index fell 0.02% The Nasdaq Composite declined 0.08%
Stock & Sector Performance
Retail earnings were the standout theme of the regular session, delivering some of the day's sharpest individual moves even as the broader indexes stayed muted. Abercrombie & Fitch surged roughly 40% after beating earnings estimates and raising its full-year guidance, while on the downside, Intuit sank about 10% after its outlook failed to impress, Zoom Communications fell 6.2% as its third-quarter guidance missed expectations despite a fiscal second-quarter beat, and Kohl's dropped 4.7% on disappointing second-quarter sales and comparable-sales figures. Within the Dow, gains were led by UnitedHealth, Travelers Companies, and Cisco Systems, while Merck and Goldman Sachs were among the session's laggards.
Magnificent Seven trading was mixed and comparatively subdued during the regular session ahead of the after-hours earnings wave. Meta Platforms rose approximately 1% on the day after its legal settlement news, while Microsoft, Tesla, Alphabet, and Amazon all traded lower. Nvidia itself was little changed during the regular session, closing near $213 after snapping its seven-day losing streak on Tuesday — a calm before a volatile after-hours session once earnings dropped. Separately, Moderna fell about 5%, pulling back further after its roughly 150% surge tied to last week's oncology trial news.
Major Company Story of the Day
Meta Platforms' legal settlement was the dominant single-company story of the regular session. The company agreed to pay approximately $16.7 billion to resolve a coalition of state attorneys general's lawsuit alleging that its social media apps, including Facebook and Instagram, misrepresented the mental-health harms posed to young users. California Attorney General Rob Bonta said the settlement "will make social media less dangerous for our kids and make a world of a difference for children and their families," adding that Meta has agreed to "massive transformations" to its platforms within months. Shares initially popped on the news before paring gains, ultimately closing up about 1% on the day.
After the Bell: Nvidia and Salesforce Earnings
Nvidia capped the day with a fiscal second-quarter report that beat across nearly every headline metric, followed by an earnings call that fundamentally changed the stock's trajectory in real time. The company posted revenue of $96.22 billion against a $92 billion consensus — a $4.06 billion beat that ranks as the largest dollar beat in Nvidia's earnings history — with adjusted EPS of $2.22, up 111% year-over-year. Data Center revenue reached $89.02 billion, accelerating to 116.6% year-over-year growth, the fastest pace in four quarters, and now represents 92% of total revenue. Nvidia guided third-quarter revenue to $108 billion, plus or minus 2%, well above the $104.2 billion Wall Street consensus.
Despite the beat, shares initially dropped to around $206 in after-hours trading as investors focused on gross margin guidance: management said Q3 gross margins are expected at 74%, plus or minus 50 basis points, before bottoming at 71%–72% in the fourth quarter, driven by what CFO Colette Kress described as "extreme" memory pricing headed higher into next year. The reaction reversed once the earnings call began. CEO Jensen Huang told analysts that Nvidia has "achieved AGI for many tasks," that demand is running higher than supply through fiscal 2028, and that next year will be "pretty extraordinary," adding the company has "supply for about 70% growth" while "demand is much higher than that." Kress also addressed "circular financing" criticism of Nvidia's roughly $50 billion in investments in frontier AI labs directly, saying "we recognize the scale of this support, and we know some will call this circular financing. We see it differently." The stock reversed course during the call, surging to an after-hours high of $220.80 before settling around $218.10, up 4.03% from the regular-session close — Nvidia's first post-earnings rally in four quarters, ending a pattern of "sell-the-news" reactions to its prior three reports. The quarter also carried a notable signal for the memory sector: Kress confirmed that memory supply "will remain a bottleneck at least through the end of fiscal year 2028," with implications for suppliers like Micron and SK Hynix.
Salesforce delivered the other major after-hours story, with shares rising more than 10% in extended trading following its fiscal second-quarter results. Revenue of $11.35 billion edged past the $11.32 billion consensus, but the standout figure was adjusted earnings per share of $5.90, crushing the $3.27 estimate by 80% — one of the largest EPS beats relative to consensus from a mega-cap software company in recent memory. The company raised full-year adjusted EPS guidance to a range of $16.67 to $16.71, more than $2.50 above the prior consensus of $14.10. The quarter's most closely watched metric, AI and Data ARR, came in at $3.9 billion, up 210% year-over-year, reinforcing the case that enterprise demand for Salesforce's Agentforce AI agent platform is translating into durable, incremental revenue rather than cannibalizing existing CRM spending. The one blemish was Remaining Performance Obligation of $66.3 billion, short of the $67.7 billion consensus, a $1.4 billion gap that leaves some ambiguity over whether the shortfall reflects favorable deal-timing or a broader shift toward shorter, usage-based AI contracts that populate revenue differently than traditional multi-year enterprise deals.
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