Why Thursday Could Be a Big Day for the Stock Market

Core Viewpoint - The upcoming financial reports from Nvidia and Salesforce are anticipated to provide critical insights into the current state of the AI revolution and its implications for the stock market, particularly for SaaS stocks and AI-related technologies [2][13]. Nvidia - Nvidia has experienced a remarkable stock increase of 1,200% since early 2023, driven by the demand for its GPUs, which are essential for running AI models in data centers [4]. - The company's third-quarter revenue reached $57 billion, marking a 62% year-over-year increase and a 22% quarter-over-quarter increase, with diluted EPS rising 67% to $1.30 [5]. - Nvidia's management forecasts record revenue of $65 billion for Q4, representing a 65% growth, with adjusted EPS expected to be $1.45, an increase of 63% [5]. - Nvidia constitutes approximately 7.4% of the S&P 500, indicating that its performance can significantly influence the index's movement [6]. Salesforce - Salesforce's stock has declined by 30% since the start of 2026 due to fears that advancements in AI could diminish demand for its SaaS offerings [8]. - For its fiscal 2026 third quarter, Salesforce reported revenue of $10.3 billion, a 9% year-over-year increase, and EPS of $2.20, up 38% [9]. - The company's remaining performance obligation (RPO) grew 12% to $59.5 billion, suggesting strong future demand as RPO growth outpaces revenue growth [9]. - Salesforce is forecasting Q4 revenue of $11.2 billion, indicating an 11% growth, although heavy investments in AI-related tools are expected to reduce EPS by 15% [10]. - Despite its small weighting of 0.28% in the S&P 500, Salesforce's results are viewed as a bellwether for the overall SaaS market [11]. Market Sentiment - There is a prevailing concern among investors regarding the potential decline of SaaS stocks due to AI advancements, termed the "SaaSpocalyse" [8]. - However, Nvidia's CEO Jensen Huang suggests that fears of AI replacing existing software solutions may be exaggerated, arguing that AI will likely enhance rather than replace current software offerings [14].