Asian stocks rose after Nvidia beat forecasts, but persistent US inflation left investors awaiting Fed Chair Kevin Warsh’s Jackson Hole speech
Nvidia boosted stock markets after reporting stronger-than-expected quarterly earnings and an optimistic revenue forecast, driven by high demand for its AI chips.
Despite the positive tech news, investor caution persists due to US inflation data showing the core PCE price index remained at 3.3%, well above the Federal Reserve's target.
Market focus has now shifted to the Federal Reserve Chair's upcoming speech at the Jackson Hole symposium for signals on future interest rate policy in response to the persistent inflation.
Asian technology shares found fresh momentum on Thursday (August 27, 2026) after Nvidia delivered another set of stronger-than-expected results, although stubborn US inflation kept investors from fully embracing the rally before Federal Reserve Chair Kevin Warsh’s closely watched Jackson Hole speech.
Nvidia’s shares jumped 4.7% in after-hours trading, recovering from an initial decline, after the chipmaker reported that quarterly revenue had more than doubled and offered a forecast well ahead of Wall Street’s expectations.
The results lifted S&P 500 e-mini futures by 0.4% and helped push MSCI’s broadest index of Asia-Pacific shares excluding Japan up 0.7%. South Korea’s KOSPI gained 1.5% and Taiwanese shares rose 0.9%, while Japan’s Nikkei 225 slipped 0.4%.
Nvidia shows AI investment boom has further to run
For investors who have begun questioning how much longer the AI investment boom can continue, Nvidia’s numbers provided a forceful response.
The company generated revenue of US$96.22 billion in the second quarter of its 2027 financial year, up 18% from the previous quarter and 106% from a year earlier. Analysts had expected US$92.17 billion.
Adjusted earnings reached US$2.22 per share, beating the consensus estimate of US$2.10. Data Centre revenue, the engine of Nvidia’s rapid expansion, surged 117% to US$89 billion against a forecast of US$85.08 billion.
Nvidia expects revenue to reach about US$108 billion in the current quarter, plus or minus 2%, comfortably above Wall Street’s US$104.19 billion estimate.
Chief executive Jensen Huang described AI as having reached an “inflection point”, declaring: “It’s doing useful work. Its tokens are productive and profitable. Now, compute is revenue.”
The company also broke with its usual practice of providing only near-term forecasts by predicting revenue growth of approximately 70% in its 2028 financial year. Analysts had been expecting growth of 44%.
Demand is increasingly coming not only from major cloud-computing companies, but also from AI laboratories, specialised cloud providers, governments and industrial customers. Nvidia expects AI laboratories alone to account for roughly one-quarter of its overall business next year.
Its next-generation Vera Rubin platform has entered full production and is expected to contribute about one-fifth of Data Centre revenue during the current quarter. Nvidia and Amazon Web Services also plan to deploy another two million Nvidia graphics processors across Amazon’s global infrastructure during 2027 and 2028.
The outlook was not without risks. Nvidia excluded Data Centre computing revenue from China from its third-quarter forecast, reflecting continued uncertainty over US export restrictions and the availability of its advanced chips to Chinese customers.
Higher memory and component costs are also beginning to weigh on profitability. Nvidia expects its gross margin to decline from 75% in the latest quarter to about 74% in the current period, below analysts’ estimate of 74.77%. Finance chief Colette Kress indicated that the margin could fall further to between 71% and 72% in the fourth quarter.
Even with those concerns, the strength of Nvidia’s business offered reassurance that the extraordinary wave of spending on AI data centres has not yet peaked.
The optimism arrived only hours after investors had absorbed a less encouraging signal from the US economy.
The core Personal Consumption Expenditures price index, the Fed’s preferred measure of underlying inflation, increased 0.2% in July after rising 0.1% in June. Compared with a year earlier, core PCE inflation remained at 3.3%, offering no sign that price pressures were moving closer to the Fed’s 2% target.
Headline PCE inflation also rose 0.2% from the previous month, reversing June’s 0.1% decline, while the annual rate remained at 3.7%.
The wider report suggested that American households were becoming more cautious. Personal income increased 0.4% and disposable income rose 0.5%, but consumer spending grew by just 0.2%. Once inflation was taken into account, spending was virtually unchanged, while the personal saving rate stood at 3%.
The inflation figures prompted traders to increase the probability of a quarter-point Fed rate rise in September to about 44%, from roughly 36% before the data was released.
That leaves Warsh’s first Jackson Hole address as Fed chair carrying greater significance than it might have only a few days ago.
When he speaks on Friday (August 28), investors will listen for whether he regards inflation at its current level as sufficient reason to raise rates in September or whether softer consumer spending warrants more time before the Fed tightens policy again.
Markets will also be looking for his assessment of elevated bond yields and whether the productivity gains promised by AI could eventually help reduce inflation.
The yield on the benchmark 10-year US Treasury note eased by 1.5 basis points to 4.647% during Asian trading on Thursday, while the dollar remained near its highest level in a week.
Nvidia has shown that the corporate appetite for AI computing remains formidable. Warsh must now tell markets whether the inflation and interest-rate environment will allow that investment boom to keep driving share prices higher.
