The Overnight Picture

The session opens with a single earnings report casting a long shadow over everything else. Nvidia (NVDA) reported fiscal first-quarter net income of $58.3 billion — a 211% increase year-over-year — on revenue of $81.6 billion, itself an 85% jump from the same period in 2025. The company guided for approximately $91 billion in second-quarter revenue, topping Wall Street's prior estimates by a meaningful margin.

Despite the headline figures, NVDA slipped more than 1% in extended trading. That reaction is less a verdict on the quarter than a reflection of how much was already priced in. At Nvidia's current valuation, beating estimates is the baseline expectation — investors are now scrutinizing the competitive horizon, particularly as better-funded challengers invest aggressively in AI silicon.

The earnings rippled through Asian markets overnight. Taiwan Semiconductor Manufacturing Company (TSM), Nvidia's primary manufacturing partner, benefited from renewed confidence in AI chip demand. South Korea's KOSPI, which had already surged 8% earlier this week on a Samsung union agreement, held constructive. U.S. equity futures traded slightly lower heading into Thursday's open, with investors weighing Nvidia's after-hours dip against the broader earnings strength.

Today's Key Themes

Theme 1: The AI infrastructure trade remains intact — but the bar is rising. Nvidia's results are the clearest available evidence that hyperscaler and AI cloud spending has not slowed. Revenue from data center customers drove the bulk of the $81.6 billion print. CEO Jensen Huang also announced a partnership with Uber (UBER) to deploy Nvidia-powered robotaxi services across 30 cities globally by 2028, signaling the company's push into autonomous vehicles as a second growth vector beyond data centers.

The muted after-hours reaction tells a separate story. Investors are beginning to ask whether the AI buildout's next phase will be as GPU-centric as the last one — a question that Cerebras Systems' debut made concrete.

Theme 2: Europe is deteriorating faster than policymakers anticipated. Flash PMI (Purchasing Managers' Index) readings — monthly surveys of business activity where a reading below 50 signals contraction — came in sharply lower across the euro area and the UK in May. The UK services PMI hit its lowest level in 64 months, with businesses citing the Middle East conflict and domestic political uncertainty as drags. The euro area composite reading pointed toward an outright second-quarter contraction.

Germany added a fiscal dimension to the picture. The finance ministry reported a €41 billion federal budget deficit, a figure that could trigger an Excessive Deficit Procedure — the formal EU mechanism that requires member states to reduce borrowing. Weak growth plus fiscal pressure is a difficult combination for European policymakers, and the data raises the probability that the European Central Bank will need to move more aggressively on rates than its current path implies.

Theme 3: The AI chip IPO market has opened. Cerebras Systems, the startup behind what it describes as the world's largest computer chip, debuted on the Nasdaq MarketSite after raising $5.55 billion in its IPO. Shares were expected to open approximately 82% above the listing price — a first-day premium that reflects sustained institutional appetite for AI hardware names outside the established duopoly of Nvidia and AMD (AMD).

CEO Andrew Feldman has positioned Cerebras as an architectural alternative to Nvidia's GPU clusters, arguing that a single large wafer-scale chip handles certain AI training workloads more efficiently. Whether that argument holds up at scale is a question the public markets will now help answer. The listing also coincides with reports that SpaceX filed for a public offering, adding to a notably active stretch for capital markets.

The Calendar

Walmart (WMT) reports fiscal first-quarter earnings before Thursday's open. As the largest U.S. retailer by revenue, Walmart's results serve as a direct read on the health of lower- and middle-income American consumers — the cohort most exposed to tariff-driven price increases. Wall Street will focus on comparable-store sales growth, any update to full-year guidance, and management's commentary on how tariff-related cost pressures are flowing through to shelf prices. A cautious outlook from Walmart would add weight to the European macro deterioration narrative and raise questions about the resilience of U.S. consumer spending.

JPMorgan Chase (JPM) CEO Jamie Dimon has been active in public commentary this week, flagging bond market volatility and what he views as unresolved inflation risks. His tone has been cautious rather than alarmed — acknowledging corporate earnings resilience while warning that markets may be underpricing macro risks. Dimon's comments carry institutional weight given JPMorgan's scale across lending, trading, and investment banking.

Apple (AAPL) is separately reported to be targeting $15 billion in services revenue through AI-driven initiatives, with analysts raising price targets in response. No scheduled event, but the story is active in the tape.

Tesla (TSLA) launched its Full Self-Driving capability in China after years of regulatory delays. Local EV competitors have continued advancing their own autonomous systems, making the timing a competitive question as much as a technical milestone.

Watch List

WMT guidance language on tariffs. The headline comparable-sales number matters, but the more market-moving element will be whether Walmart signals that cost pressures are being absorbed, passed on to consumers, or beginning to weigh on volumes. Any downgrade to full-year guidance would be a meaningful bearish signal for the consumer discretionary and staples sectors.

NVDA at the open. The after-hours dip of more than 1% came on high volume. Watch whether that selling extends into the regular session or reverses as investors reassess the $91 billion Q2 guide. A gap fill at the open followed by a recovery would suggest the after-hours move was a sentiment overshoot; sustained selling would indicate that competitive concerns are being repriced more seriously.

European bond spreads. Germany's €41 billion deficit figure and the bloc-wide PMI deterioration are a combination that tends to widen peripheral spreads — the gap in borrowing costs between countries like Italy and Spain relative to Germany. A widening move in Italian BTPs would signal that markets are beginning to price sovereign risk back into the European macro picture.

Cerebras (CERE) opening trade. An 82% premium over the listing price is a strong signal of demand, but first-day IPO pops often give back ground in the days that follow. The more instructive data point will be where the stock closes relative to its open — and whether institutional investors use the pop to distribute shares or hold through the session.

Bond yields. Dimon's warnings about the bond market rout are not new, but the combination of European fiscal stress, sticky U.S. inflation, and a heavy issuance calendar makes Treasury yields worth watching closely. A move higher in the 10-year yield today would tighten financial conditions and add pressure to rate-sensitive equities — particularly the high-multiple AI names that have led the recent rally.