The stock market has been under pressure this week, as investors have grown concerned that January's big gains in the Nasdaq Composite (^IXIC +0.77%) and other major stock indexes could prove to be just another head fake in a bear market that has lasted more than a year now. Yet market participants seemed a little more comfortable with the prospects for stocks on Thursday morning, as the Nasdaq rose nearly 1% in premarket trading.
A pair of tech stocks reported their latest financial results overnight, and that helped build more positive sentiment on Wall Street. In particular, strong numbers from Nvidia (NVDA +1.41%) and Alibaba Group (BABA +1.70%) lifted their respective share prices and brought optimism to the tech stock sector more broadly.
Nvidia powers up
Shares of Nvidia posted a powerful jump on Thursday morning, rising 12% in premarket trading. The semiconductor giant reported fiscal fourth-quarter financial results for the period ending Jan. 29, and investors reacted positively to all the things that Nvidia said to feed the growing hype about artificial intelligence (AI).
Nvidia's backward-looking numbers actually weren't all that great on their face, although investors were pleased to see some signs of the business turning itself around. Revenue of $6.05 billion was down 21% year over year, but it was slightly higher than Nvidia brought in during the third quarter three months earlier. Similarly, adjusted earnings of $0.88 per share were down 33% from the fourth quarter of the previous fiscal year, but they jumped 52% from three months ago.
NASDAQ: NVDA
Key Data Points
However, Nvidia played up its prospects for innovative products, particularly in the AI space. The chipmaker touted its new AI supercomputer, discussed AI-powered neural rendering in its video gaming division, and announced plans to offer AI as a service to large enterprise customers.
Nvidia gave favorable guidance for the current quarter, projecting revenue of around $6.5 billion and favorable trends on key operating metrics as well. Even though the company is still vulnerable to ongoing macroeconomic factors, particularly in markets like China, Nvidia believes that it's at an inflection point from which it intends to launch a new chapter in its growth story -- and could become an AI stock in its own right.
Alibaba gets a bump higher
Elsewhere, shares of Alibaba Group climbed 5% early Thursday. The Chinese internet giant reported fiscal third-quarter financial results for the period ending Dec. 31, 2022, and shareholders generally liked what they saw in Alibaba's immediate future.
Alibaba's fundamental business performance was impressive. Revenue gains came in at just 2%, with Alibaba posting $35.9 billion in sales. However, adjusted net income grew 12% year over year to $7.24 billion. That produced earnings per American depositary share of $2.79, which was 14% higher than in the year-earlier period.
NYSE: BABA
Key Data Points
CEO Daniel Zhang noted that Alibaba had to overcome a lot of headwinds during the quarter in order to deliver such solid performance. In particular, the relaxing of zero-COVID policies led to a huge surge in COVID-19 cases, which in turn had disruptive impacts on the Chinese economy. However, Zhang is optimistic that China has turned the corner, and he expects that improving consumer sentiment will help drive greater levels of economic activity that in turn will create new opportunities for Alibaba to grow.
Alibaba investors have hoped that the pandemic would have less of an impact on the Chinese economy in 2023. With its own explorations of artificial intelligence capabilities and the likelihood that foreign competitors will have difficulty introducing internet-based AI to the Chinese market, Alibaba has the upper hand in working on its own AI initiatives.
