Markets Slide into the Close; NVIDIA, CRM & More Report

Markets closed lower Wednesday, influenced by concerns over NVIDIA's Q1 earnings and President Trump's warnings regarding software sales to China. NVIDIA reported strong revenue growth (+69% Y/Y to $44.1B) but missed EPS estimates due to a one-time $4.5B charge, while projecting a potential $8B revenue loss from China sales restrictions; shares are up over 5% after hours. Salesforce beat expectations and raised guidance, while Hewlett-Packard missed estimates and lowered guidance, impacting shares negatively.

Analysis

The market exhibited a slight downturn on Wednesday, May 28, 2025, with major indices like the Dow (-0.58%) and S&P 500 (-0.56%) retreating, influenced by anticipation surrounding NVIDIA's earnings and geopolitical trade tensions involving potential U.S. restrictions on software sales to China. NVIDIA (NVDA) reported mixed Q1 results; while revenues surged 69% year-over-year to a record $44.1 billion, propelled by a 73% Y/Y growth in Data Center revenue to $39.1 billion, its earnings per share of 81 cents missed consensus by 4 cents due to a $4.5 billion one-time charge, thereby ending a nine-quarter streak of earnings beats. Gross margins for NVIDIA, at 61%, also fell short of the 71% analysts had anticipated, and the company highlighted a potential $8 billion revenue impact stemming from a U.S. ban on sales to China. Despite these mixed signals, NVDA shares rose over 5% in after-hours trading. In contrast, Salesforce (CRM) exceeded Q1 expectations, reporting earnings of $2.58 per share on revenues of $9.8 billion (+8% Y/Y), and subsequently raised its full-year guidance, which led to a 1.25% share increase in late trading despite the stock remaining down double-digits year-to-date. Conversely, Hewlett-Packard (HPQ) disclosed its fourth consecutive quarterly earnings miss, with Q2 EPS at 71 cents (-13% Y/Y) and revenues of $13.2 billion, both trailing estimates; the company also lowered its guidance, citing tariff issues, which precipitated a 15% decline in its shares during late trading. Other notable earnings releases included e.l.f. Beauty (ELF), which surpassed Q4 estimates with an EPS of 78 cents and announced a $1 billion acquisition of the rhode brand, though its shares saw only a marginal uptick and remained down 28% year-to-date. Enterprise AI firm C3.ai (AI) also outperformed expectations, with revenues growing 25% Y/Y to $108.7 million and a smaller-than-anticipated loss per share, boosting its shares by 12%.

Key Decisions for Investors

• Investors should closely monitor NVIDIA's ability to navigate potential China sales restrictions and manage gross margin pressures, despite its strong top-line performance and data center segment momentum.
• Salesforce's robust Q1 results and upgraded guidance present a potentially favorable outlook, warranting investor attention, particularly in light of its year-to-date share price underperformance.
• Significant caution is advised for Hewlett-Packard due to its persistent earnings misses and downward guidance revision, signaling substantial operational and market headwinds.
• The strong performance of C3.ai and e.l.f. Beauty's strategic acquisition indicate sector-specific opportunities; however, for ELF, investors should weigh its growth initiatives against its current year-to-date share depreciation and the integration risk of a large acquisition.
• Given the mixed market sentiment, geopolitical trade uncertainties, and divergent corporate earnings, a selective investment approach focusing on companies with resilient fundamentals and clear growth catalysts is prudent.