Resilient markets: Nvidia’s miss, France’s political strains, and durable demand
The world’s largest company in terms of market cap, Nvidia, reported another quarter of staggering growth, but it wasn’t enough to satisfy a market hooked on perfection. Nvidia’s Q2 revenue hit $46.7 billion, up 56% from last year and ahead of estimates. Gaming, professional visualization and most product lines beat expectations. But data centre revenue, the crown jewel of the Artificial Intelligence (AI) boom, came in a touch light at $41.1 billion, missing consensus for the second quarter in a row. That miss, combined with a cautious outlook, was enough to knock the stock lower.
The tension here is simple: Nvidia dominates AI chips, but expectations are so stretched that even solid beats look underwhelming. Investors are already debating whether spending on infrastructure can continue at this breakneck pace. The guidance for Q3 implies another nine-billion-dollar sequential revenue jump, but bulls were hoping for even more. Add in ongoing uncertainty about China sales, and the bar keeps getting harder to clear.
French assets sold off after Prime Minister François Bayrou called a confidence vote for September 8 that he looks destined to lose. Should he lose that vote, President Macron would either appoint another prime minister or dissolve parliament, raising the risk of fresh elections just a year after the last snap vote.
Markets reacted quickly to this news. The CAC 40 Index dropped more than one percent for a second straight day, sovereign spreads widened, and ten-year bond yields increased. Traders are already gaming out scenarios for budget battles that could follow, with deficit targets likely to drift higher. For equity investors, banks and domestic stocks are the most sensitive to this political turbulence. Volatility markets are starting to price in more noise through the fall, with hedges around the September vote already getting expensive.
Headline durable goods orders fell 2.8% in July, but the details told a better story. Excluding transportation, orders rose more than one percent for the fourth consecutive month, pushing core orders up 3.8% year-on-year, the fastest pace in three years. Non-defence capital goods shipments also climbed, feeding directly into GDP. The volatility in aircraft orders, defence up, commercial down, continues to obscure the underlying trend, but investment in equipment remains steady.
It’s clear tariffs have injected chaos into the month-to-month data, yet the broader picture points to resilience in business spending. As long as core orders keep rising, fears of an imminent investment slump will be harder to defend.
With earnings season now behind us—capped by Nvidia’s mixed report—we turn our attention to September and what it may bring. Historically, the month has a weak track record, but with corporate buybacks set to accelerate and macroeconomic data still signalling growth, the burden of proof remains on the bears.
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