Nvidia Tops $5 Trillion as Fed Dampens Wall Street’s Mood

Nvidia Breaks the $5 Trillion Barrier

It finally happened, Nvidia (NVDA | +2.99%) hit a jaw-dropping $5 trillion market cap, cementing its position as the undisputed king of the AI boom. The stock surged 2.99% on Wednesday, fueled by optimism ahead of a much-anticipated meeting between President Trump and China’s Xi Jinping, where AI chip exports are expected to be high on the agenda.

CEO Jensen Huang is clearly on a roll. His company has now become the beating heart of the global AI industry, powering everything from ChatGPT to Google Gemini. During Nvidia’s GTC conference in Washington, Huang revealed $500 billion in chip orders and a deal to build seven U.S. government supercomputers. Talk about flexing some silicon muscle.

The company’s rise has been nothing short of phenomenal, up 1,275% since late 2022 and now accounting for nearly one-fifth of this year’s +17% gain in the S&P 500. Yet with a valuation near 34x forward earnings, expectations are sky-high. One misstep, and gravity might remind us that chips don’t float forever.

Alphabet Shines, Meta Trips, Microsoft Misses the Mark

After the closing bell, the spotlight shifted to Silicon Valley’s earnings trio and the results were anything but uniform.

Alphabet (GOOG | +2.51%) delivered a blockbuster quarter, surpassing $100 billion in revenue for the first time ever, with net income soaring 33% to $35 billion. Even a $3.5 billion EU fine couldn’t spoil the party.

Meta Platforms (META | +0.03%), on the other hand, took a nosedive (pre-market -7.33%) after an unexpected $15.9 billion tax hit slashed its quarterly profit by 83% to $2.7 billion. CEO Mark Zuckerberg tried to highlight strong revenue growth and progress in AI hardware, but investors weren’t in the mood.

Microsoft (MSFT | -0.1%) reported solid growth - revenue up 17% to $77.7 billion - but the market punished it for ballooning AI infrastructure spending, up nearly 50% quarter-over-quarter to $34.9 billion.

So, while the Big Three delivered strong numbers overall, only Alphabet managed to truly impress investors.

Powell Plays Party Pooper

The Federal Reserve cut rates by another 25 basis points to a range of 3.75–4.00%, its second reduction of the year. Investors had hoped for a clearer hint at another cut in December, but Fed Chair Jerome Powell poured cold water on that idea.

He warned that opinions within the Fed are sharply divided, not exactly what markets wanted to hear.

The result? Treasury yields jumped, the 10-year note rising to 4.07%, while the euro/dollar slipped below 1.16.

In short: Powell giveth, and Powell taketh away.

Trump and Xi Mend Trade Ties

After the market closed, another headline grabbed investors’ attention and it could have broad implications for global trade and tech.

President Donald Trump and Chinese President Xi Jinping met for the first time since 2019, a 90-minute meeting held in Busan during the APEC summit. The tone was surprisingly positive. Trump described the encounter as “amazing”, giving it a “12 out of 10” and announced a cut in tariffs on Chinese goods from 20% to 10%, bringing the average U.S. tariff level down to roughly 45%.

In return, China agreed to temporarily lift export restrictions on rare earth metals, materials critical for everything from defense systems to EVs and AI hardware. The two sides also discussed cooperation on controlling the flow of fentanyl ingredients to the U.S. and even touched on collaboration related to the war in Ukraine.

For markets, the real takeaway is that Trump’s softer stance on trade could ease supply chain pressures and bolster U.S.–China tech relations, potentially a major tailwind for companies like Nvidia, which has long struggled under AI chip export restrictions.

Other Movers

Outside the AI frenzy, there were a few notable standouts.

Caterpillar (CAT | +11.63%) roared after posting better-than-expected earnings and raising its full-year outlook.

Verizon (VZ | +2.26%) also climbed on upbeat results.

Meanwhile, Boeing (BA | -4.37%) disappointed once again with another multi-billion-dollar write-down on its delayed 777 program, and Kraft Heinz (KHC | -4.47%) soured investors’ appetites by cutting its guidance due to weaker consumer spending.

Looking Ahead

The outcome of the Trump–Xi meeting adds a new layer of intrigue to an already unpredictable market. If these warmer trade relations hold, the AI sector could see a fresh wave of demand, particularly if restrictions on chip exports to China are eased in the coming months.

At the same time, Powell’s cautious stance reminds investors that the monetary backdrop remains uncertain. For now, markets are caught between AI-fueled euphoria and central-bank realism, a cocktail that promises more volatility ahead.

But one thing’s for sure: with Nvidia blazing past $5 trillion and trade tensions easing, it feels like Wall Street just got another jolt of silicon-powered adrenaline.

---

Kristoff - ChartMill

Next to read: Breadth Weakens Again as Selling Pressure Accelerates