US Stock Futures Rise on Strong Nvidia Outlook; PCE Inflation Rises 3.3%

Nvidia's AI Forecast Ignites Futures Rally Amid Inflation Data

US stock futures surged in pre-market trading on Friday, driven by Nvidia's $NVDA significantly raising its long-term revenue forecast to $150 billion for fiscal year 2028, signaling sustained strength in artificial intelligence demand. This robust outlook from the semiconductor giant provided a powerful impetus to technology shares, overriding immediate concerns from fresh inflation data.

The positive sentiment propelled S&P 500 futures ($ES00) up 0.8% to 4,548 and Nasdaq 100 futures ($NQ00) higher by 1.2% to 15,640 by 7:30 AM ET. This occurred even as data showed the Federal Reserve's preferred inflation gauge, the core Personal Consumption Expenditures (PCE) price index, climbed 3.3% annually in July, slightly exceeding economists' expectations.

Market Impact

Nvidia shares ($NVDA) jumped over 5% to $495 in pre-market trading following the announcement, adding approximately $60 billion to its market capitalization. This uplift was fueled by the company's projection of $150 billion in revenue for FY28, a substantial increase from its current annual run rate and a strong endorsement of the burgeoning AI market's potential. The stock's pre-market move put it on track to approach its all-time high of $502.66 set in August.

Broader market indices reacted positively, with the S&P 500 futures ($ES00) pushing past the 4,540 resistance level, a mark not consistently held since early August. The technology-heavy Nasdaq 100 futures ($NQ00) saw its largest single-day pre-market gain since early July, underscoring the market's sensitivity to AI-driven growth narratives. This tech-led rally contrasted with earlier, more muted reactions to the inflation data.

The core PCE price index, excluding volatile food and energy components, rose 3.3% year-over-year in July, up from 3.0% in June, according to the Bureau of Economic Analysis. On a month-over-month basis, core PCE increased 0.2%, matching June's reading. The headline PCE index saw a 3.3% annual increase, accelerating from 3.0% in the prior month, while monthly headline PCE also rose 0.2%.

In response to the inflation data, US Treasury yields saw a modest uptick, with the benchmark 10-year Treasury yield ($US10Y) rising 2 basis points to 4.22% immediately after the PCE release, before stabilizing. The US Dollar Index ($DXY) also firmed slightly to 103.80, reflecting underlying hawkish sentiment regarding Fed policy. However, the magnitude of these moves was largely overshadowed by the strong corporate earnings news from Nvidia, demonstrating the market's current prioritization of growth catalysts over incremental inflation shifts.

What Analysts Are Saying

Analysts largely viewed Nvidia's forecast as a powerful affirmation of the AI revolution, with some suggesting it could redefine market expectations for the entire semiconductor sector. "Nvidia's $150 billion FY28 target is a mic drop moment, solidifying their dominant position in the AI chip arms race and signalling that the AI spending tsunami is just beginning," noted Dan Ives, Managing Director at Wedbush Securities. He added, "This is not just about Nvidia; it's a green light for the entire tech ecosystem involved in AI infrastructure."

Goldman Sachs analysts, in a client note issued Friday morning, reiterated their 'Buy' rating on $NVDA, raising their 12-month price target to $520 from $480. They emphasized, "The revised long-term outlook provides clear visibility into sustainable revenue growth beyond the near-term cycle, driven by hyperscale cloud spending and enterprise AI adoption." They also highlighted Nvidia's expanding software and services revenue as a key component of future growth.

However, some strategists cautioned against over-exuberance, particularly given the persistent inflation data. "While Nvidia's outlook is undeniably strong, the tick-up in core PCE inflation to 3.3% means the Fed is still far from its 2% target," stated Krishna Guha, Head of Global Policy and Central Bank Strategy at Evercore ISI. He added, "The market is caught between robust corporate performance and the reality of 'higher for longer' interest rates, creating a challenging environment for broader market gains."

What to Watch

Investors will closely monitor Nvidia's upcoming GTC conference and subsequent earnings reports for further details on its AI roadmap and customer demand. Key technical resistance for $NVDA sits near the $500 level, with strong support around $470. Any signs of a slowdown in hyperscale or enterprise AI spending could temper the current bullish sentiment.

The next critical data points for inflation will be the August Consumer Price Index (CPI) report, scheduled for release in mid-September, followed by the August PCE data in late September. These reports will provide further clarity on whether the recent inflation acceleration is a temporary blip or a more entrenched trend, directly influencing the Federal Reserve's policy decisions.

The Federal Open Market Committee (FOMC) meeting on September 19-20 remains a pivotal event. Market participants will be dissecting every word from Chair Jerome Powell and other FOMC members for clues on future rate hikes or the duration of restrictive policy. Currently, futures markets are pricing in approximately a 30% chance of a 25 basis point rate hike in September.

For the broader market, the S&P 500 ($SPX) faces immediate resistance at 4,580, with a break above potentially targeting 4,600. Key support is identified around 4,500 and then 4,450. A significant risk factor remains the potential for an unexpected hawkish shift from the Fed or any indications of a broader economic slowdown that could dampen corporate spending, even in high-growth sectors like AI.