Nvidia and Salesforce Surge on Earnings: Bear Cases Collapse
Key Points
- Salesforce stock surged 22% on Thursday after reporting its strongest sales growth in four years with AI bundle bookings more than doubling.
- Nvidia rose 8% following earnings that showed hyperscalers now account for roughly half its business, with revenue projected to grow 70% in fiscal 2028.
- Jim Cramer said both earnings reports demolished major bear cases that had pressured the stocks, including concerns about AI undermining software subscriptions and GPU depreciation.
Nvidia's results addressed an even broader array of concerns that had circulated on Wall Street. The company's earnings revealed that hyperscalers now account for roughly half of its business, with sovereign AI projects, neoclouds, and other customers making up the remainder, demonstrating meaningful diversification beyond the hyperscaler concentration that critics had flagged. The company's next-generation Vera Rubin chip remains on schedule, while CEO Jensen Huang said older Nvidia infrastructure can remain productive for years as software improvements enhance performance. Amazon Web Services, despite developing its own AI chips, plans to buy 2 million Nvidia GPUs and potentially millions of its new Vera CPUs, a commitment Cramer said underscores why demand remains resilient.
The most significant forward guidance came in Nvidia's revenue projection: the company indicated it could grow 70% in fiscal 2028, substantially above the roughly 45% Wall Street consensus had expected. That forecast reflects growing visibility and confidence in AI infrastructure demand.
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Salesforce had entered Thursday down 22% for the year despite rallying over the previous month, making Thursday's 22% surge material in reversing year-to-date declines. Cramer attributed the market reversals to the danger of letting popular narratives eclipse what companies actually deliver. "The short-pocalypse hedge funds got annihilated by Salesforce and Nvidia," he said. "If you listened to me and just owned these stocks ... you had a phenomenal day."
These rallies mark the second consecutive earnings season in which major technology stocks have defied bearish predictions that had dominated investor conversation. The combination of stronger-than-expected growth, diversification, and aggressive forward guidance suggests Wall Street's consensus estimates may have lagged behind actual business momentum in both AI infrastructure and enterprise software adoption.
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What This Means
Nvidia and Salesforce's earnings-driven rallies suggest investor consensus models underestimated AI infrastructure durability and enterprise software adaptation. If both companies maintain projected growth rates and customer expansion, similar upside surprises could force further rebalancing of technology valuations across the sector, particularly among stocks with historically negative analyst revisions.
Sources: CNBC and other international news outlets.
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