Key Points:

  • Nvidia shares have shown significant growth, far outpacing the market and providing a substantial portion of the S&P 500’s gains.
  • Oracle announced plans to significantly increase revenue in the coming years, driven by growing demand for cloud services.
  • Adobe released a forecast below analysts’ expectations, causing its stock to decline.

The continuous rise in Nvidia’s stock price continues to have a significant impact on the performance of the S&P 500 index, heightening investors’ concerns about the potential negative effects on the broader market if the market sentiment toward this key player in the chip market changes.

At the same time, Oracle, one of Nvidia’s main competitors, faced a significant decline in the market value of its shares after a sharp increase in the previous trading session. Tech giant Adobe also saw its stock price fall significantly on Friday after it released a profit forecast for the current quarter that fell short of investor expectations.

Nvidia – the main driver of S&P 500 growth

The unstoppable rise of Nvidia stock, whose chips are considered the benchmark in the artificial intelligence sector, has been the key driver of the S&P 500’s performance this year. Its 140% growth has contributed nearly a quarter of the index’s total gain, which has reached 17%.

Nvidia’s impact on market sentiment is clear: an 8.2% rise in its stock last Wednesday triggered the largest intraday jump in the S&P 500 in nearly two years, completely offsetting previous losses. According to Nomura, Nvidia accounted for 44% of the index’s rise that day, adding over $200 billion to its market capitalization.

On days when Nvidia’s shares declined, the S&P 500 struggled to maintain positive momentum, only rising in 13% of those cases.

Recent events have reignited investor concerns about market power concentration in the hands of a limited number of companies. The combined weight of Microsoft, Apple, and Nvidia in the S&P 500 is nearing 20%, but Nvidia has shown the most impressive growth this year.

Experts skeptical about Oracle’s forecasts

Analysts express skepticism regarding Oracle’s ambitious forecast, which estimates that the company’s revenue will reach $100 billion by the 2029 fiscal year. Such rapid growth, according to experts, would have to be driven solely by high demand for cloud services, spurred by the rapid development of artificial intelligence technologies.

Despite these doubts, Oracle’s shares have shown impressive growth of over 50% this year. This significantly outpaces the performance of larger competitors in the cloud market, such as Microsoft and Amazon, whose growth stands at around 14% and 23%, respectively.

Oracle also revised its revenue forecast for the 2026 fiscal year upward to $66 billion. This suggests a high growth rate: 11.7% over the first two years and an even more substantial 16.1% over the next three years, as noted by Michael Ashley Schulman, Chief Investment Officer at Running Point Capital. At the same time, Oracle, one of Nvidia’s major competitors, saw a significant drop in its stock value after a sharp rise in the previous trading session. Tech giant Adobe’s stock also experienced a notable decline on Friday, driven by the company’s profit forecast for the current quarter, which fell short of investors’ expectations.

Adobe’s forecasts disappoint traders

Adobe, one of the global leaders in software development, has been actively investing in artificial intelligence technologies for generating images and videos. The company’s goal is to strengthen its position in the design software market amid growing competition from well-funded startups like Stability AI and Midjourney.

However, the financial forecast released on Thursday raised concerns among investors. Adobe expects its fourth-quarter revenue to be between $5.50 billion and $5.55 billion, slightly below the consensus forecast of $5.61 billion. The company’s adjusted earnings per share also came in below market expectations.

If current trends persist, Adobe’s market capitalization could shrink by more than $25 billion. Notably, the company’s stock is already showing negative performance this year, having fallen nearly 2% after an impressive 77% growth in 2023.

Thus, despite significant investments in promising AI technologies, Adobe is facing challenges in achieving its financial goals.