AI Stock Frenzy: Nvidia's Record Rally, Surprise Surges & Setbacks Rock Markets (Aug 28-29, 2025)

Key Facts

Nvidia’s AI boom propels records: Nvidia reported a 56% jump in quarterly revenue, affirming red-hot AI demand even as its stock dipped slightly on cautious forecasts reuters.com. The S&P 500 and Dow hit all-time highs on Aug. 28, fueled by Nvidia’s results and the broader AI rally reuters.com reuters.com.
Wall Street rides the AI wave: Major tech names soared alongside Nvidia – Alphabet jumped 2%, Amazon 1%, and Broadcom ~3% on Aug. 28 reuters.com – underscoring investor confidence that AI is a “primary structural driver” of the market reuters.com. Data-center supplier Pure Storage skyrocketed 30% to record highs after inking a deal to supply Meta’s AI supercomputer storage needs tipranks.com tipranks.com.
AI earnings blowouts: Snowflake surged 20% after hiking its 2026 sales forecast on “unprecedented” AI-driven demand for its data platforms reuters.com. Dell raised its full-year revenue outlook by ~$4 billion (to $105–109B) thanks to booming orders for AI-optimized servers powered by Nvidia chips reuters.com. (However, Dell’s stock fell ~5% after-hours due to a cautious profit forecast reuters.com.)
Soaring AI PCs and software: HP Inc. stock leapt nearly 5% on an earnings beat, credited to “growing demand for AI-powered PCs” that drove unexpected sales strength reuters.com. Palantir, a leading AI software firm, has doubled its stock value in 2025 on surging demand for its AI platforms, and earlier in August it lifted its annual revenue forecast for the second time this year reuters.com reuters.com. (Palantir’s shares are up ~600% over three years, making it the S&P 500’s top performer reuters.com reuters.com.)
Speed bumps emerge: Not all AI plays rallied – Marvell Technology plunged 12% after warning its custom AI chip sales would dip next quarter, falling short of lofty expectations reuters.com. The chipmaker’s 69% jump in data-center revenue still missed estimates ($1.49B vs. $1.51B expected) reuters.com, and executives cited “lumpiness” in orders and delayed projects as reasons for near-term caution reuters.com reuters.com.
Analyst & CEO insights: “The AI boom is far from over,” Nvidia CEO Jensen Huang said, predicting a $3–$4 trillion AI infrastructure market by 2030 reuters.com. He likened the current AI investment surge to “a new industrial revolution…everything [is] sold out” in the race for computing power reuters.com reuters.com. Analysts echoed the optimism – “AI is not going anywhere or cooling down,” one strategist noted, even if some valuations appear stretched reuters.com. Still, experts urged selectivity: Marvell’s stumble shows investors are leaving little room for disappointment in AI names reuters.com reuters.com.
Product launches & policy moves: Tech giants continue to double down on AI. On Aug. 28, Elon Musk’s startup xAI unveiled a new “agentic” AI coding assistant (grok-code-fast-1) to compete with OpenAI’s Codex and GitHub Copilot reuters.com reuters.com. Meanwhile, governments are wading in – Nvidia is in talks with U.S. officials (including President Trump) to permit sales of a scaled-down AI chip to China, though Huang admits such deals “will take a while” amid geopolitical tensions reuters.com reuters.com. Overseas, South Korea announced plans to boost national AI spending to spur growth reuters.com, highlighting how regulation and policy are evolving alongside the AI gold rush.

August 28, 2025 – AI Hype Hits New Heights

Nvidia’s Big Beat and Market Rally: Thursday brought a euphoria of AI-driven gains on Wall Street. Nvidia’s blowout earnings (revenue up 56% year-on-year) confirmed that “demand related to AI technology remains strong,” even though Nvidia’s forecast excluded China due to export uncertainties reuters.com reuters.com. The chip leader’s shares dipped just 0.8% on those cautious forecasts reuters.com, but investors seized on the bigger picture: AI spending is still surging. The S&P 500 jumped 0.3% to a record high (Nasdaq +0.5%), extending a rally that has repeatedly driven indexes to new peaks in 2025 reuters.com reuters.com. “Nvidia is such an outlier that to say it was disappointing is only against borderline impossible expectations,” quipped Baird strategist Ross Mayfield, noting that AI remains the “primary structural driver” of the bull market reuters.com. In other words, the AI boom that’s “propelled Wall Street to record highs” is nowhere near cooling off, and Nvidia’s results underscored that point reuters.com reuters.com.

Tech Titans and AI Pure-Plays Soar: Nvidia’s report set off a chain reaction among AI-linked stocks. Fellow tech giants leapt in sympathy – Google parent Alphabet rose 2%, Amazon 1%, and chipmaker Broadcom nearly 3% – as investors rotated back into big-cap names benefiting from AI demand reuters.com. More specialized “pure-play” AI companies also saw strong momentum. Cloud data warehouse firm Snowflake saw its shares rocket 19–20% after it hiked its product revenue outlook, crediting “unprecedented” AI-driven demand from enterprise customers reuters.com. And while Palantir did not issue new updates this week, the data analytics provider (a key player in military-grade AI software) remained in focus after lifting its own forecast earlier in the month – a move that drove Palantir stock up 9% in one day reuters.com and capped a 2025 run that has doubled its market value reuters.com. Even lesser-known suppliers are catching the AI tailwinds: Pure Storage (PSTG) – a flash-storage maker – stunned the market with a 30% one-day surge to all-time highs after disclosing a major deal with Meta Platforms to provide storage for Meta’s AI supercomputer projects tipranks.com tipranks.com. Pure Storage not only beat earnings estimates but also secured a commitment to deploy up to 2 exabytes of storage for Meta’s AI needs, signaling how Big Tech’s capital expenditures (like Meta’s) are creating new winners in the AI ecosystem tipranks.com tipranks.com. Likewise, HP Inc. surprised investors with a rare sales beat, as the PC maker reported strong demand for new AI-powered PCs, driving its stock up ~4.6% reuters.com. From software to hardware, any company with a convincing AI angle saw investors pile in on Aug. 28.

AI Servers and Partnerships: After the closing bell, Dell Technologies added to the day’s AI fervor. The enterprise hardware giant raised its annual revenue forecast by several billion dollars, projecting $20 billion in AI server sales in 2026 amid what it calls “exceptional” demand for AI-optimized infrastructure reuters.com reuters.com. Dell revealed it booked a record $5.6B in AI server orders in Q2 and is scrambling to fulfill an $11.7B backlog for AI hardware reuters.com. Notably, Dell’s AI servers (using Nvidia chips) are being deployed by customers like Elon Musk’s startup xAI and cloud provider CoreWeave reuters.com reuters.com. The AI frenzy did come with caveats: Dell’s stock slid about 5% in late trading because its profit margin outlook didn’t wow analysts reuters.com reuters.com, highlighting that heavy investment in cutting-edge AI gear can pressure near-term earnings. Still, the takeaway was clear – legacy tech firms are reinventing themselves around AI, and investors are rewarding those with tangible results to show. “Rising demand for AI servers” is now a key growth driver for companies like Dell and Super Micro Computer, even if competition and high costs are squeezing margins reuters.com.

Musk’s xAI Enters the Fray: In the midst of market fireworks, Tesla CEO Elon Musk made waves outside the public markets with a high-profile AI product launch. Musk’s new AI venture, xAI, unveiled a “speedy and economical” coding assistant model on Aug. 28 – marking the startup’s first major foray into the AI software arena reuters.com. Dubbed “grok-code-fast-1,” the AI model is an “agentic” coding tool that autonomously writes and debugs code. xAI is offering it free (for now) via partners like GitHub Copilot reuters.com, in a bid to challenge OpenAI’s Codex and Microsoft’s own Copilot features. Musk’s move into AI services underscores the arms race among tech leaders to stake a claim in generative AI. While this announcement didn’t directly move Tesla’s stock, it reinforced Musk’s deepening involvement in AI – complementing Tesla’s efforts in self-driving AI and robotics. The broader theme: from startups to stalwarts, innovation in AI is accelerating. As one example, Microsoft revealed that AI now writes 20–30% of its code internally reuters.com, and many in the industry – Musk included – are racing to provide the tools behind that transformation.

AI and Geopolitics: Thursday’s excitement was tempered only by brewing regulatory questions. Nvidia’s blockbuster quarter came with a caveat: the company explicitly left out any future China sales from its forecast due to U.S. export restrictions on advanced AI chips reuters.com. In Washington, discussions are underway to let Nvidia sell a less-powerful version of its next-gen “Blackwell” AI chips to China, after President Trump suggested he may allow it with a 30–50% performance cut reuters.com reuters.com. CEO Jensen Huang confirmed talks have started but cautioned “the conversation will take a while”, noting that Trump understands the strategic upside of “having the world build AI on the American tech stack” reuters.com reuters.com. This tug-of-war between national security and commercial opportunity looms large: China represents a potential $50+ billion market for AI hardware reuters.com, yet U.S. officials worry about fueling China’s military AI capabilities reuters.com. For now, Nvidia (and its investors) must navigate that uncertainty. It’s a reminder that even as AI drives massive profits, the industry’s future will be shaped by policy decisions as much as technological ones. (Internationally, the policy response is to invest more: for instance, South Korea announced plans on Aug. 29 to boost government spending on AI to spur growth reuters.com.)

August 29, 2025 – Cooling Off, Caution Signs Appear

Marvell’s AI Setback Sours Sentiment: Friday brought a dose of sobriety to the AI stock frenzy. Marvell Technology, a chipmaker supplying custom AI semiconductors to cloud giants, delivered a disappointing outlook that jolted investors. Late on Aug. 28, Marvell forecasted its next-quarter revenue below estimates – a surprise miss that it attributed to a slowdown in its custom AI chip business reuters.com. This cautious guidance sent Marvell’s stock tumbling over 12% in after-hours trading, and the sell-off carried into Friday’s session. The company’s results showed impressive growth – data-center chip sales jumped 69% last quarter – but Wall Street had expected even more (Marvell reported $1.49B in data-center revenue vs. $1.51B consensus) reuters.com. Crucially, Marvell warned that its October-quarter AI chip orders will decline, after previously projecting acceleration reuters.com. “We were expecting growth to accelerate … instead management talks about ‘lumpiness’,” lamented Summit Insights analyst Kinngai Chan, reflecting the broader disappointment reuters.com. Marvell’s CEO Matt Murphy tried to reassure that volatility in big cloud customers’ spending is “normal” when they build out new AI infrastructure reuters.com, and he predicted a stronger uptick by the fourth quarter. But the damage was done – Marvell’s stumble highlighted that not every AI supplier will meet sky-high expectations in the short term. It also hinted at shifting dynamics in the cloud AI arms race: one report suggested Microsoft is delaying its own in-house AI chips until 2028, reducing near-term demand for Marvell’s components reuters.com. Meanwhile, Marvell’s other top customer, Amazon’s AWS, has seen its growth lag as rivals (Microsoft Azure, Google Cloud) expand faster reuters.com. In short, Marvell is navigating a tougher, more competitive environment, and its hiccup Friday showed that AI’s rewards may not be evenly distributed. Still, some remain bullish on Marvell’s long game – a Stifel analyst argued the company is “well positioned to capitalize” on the custom AI chip market once hyperscalers’ orders normalize, though it “will take 12–18 months” for more consistent growth to return reuters.com.

Broader Market Pauses – Focus on Fundamentals: With Marvell casting a shadow, U.S. stock indexes paused their climb on Aug. 29. After the prior day’s record highs, Friday saw a more mixed, cautious tone: investors digested the avalanche of earnings and positioned ahead of key inflation data due that morning. The Nasdaq was little changed, as strength in some tech names was offset by profit-taking in others (the Nasdaq had surged nearly 0.8% the day before amid “tech resilience and AI enthusiasm” m.economictimes.com). The S&P 500 hovered near its peak, on track to close out a strong August driven largely by the “AI trade.” Traders noted that with a critical PCE inflation report on deck, the market was in wait-and-see mode investopedia.com. But even in a flat day, AI news kept coming. Notably, Nvidia’s CEO doubled down on his optimism in media appearances: Jensen Huang reiterated that fears of an AI plateau are unfounded, calling this “the early stages” of an AI super-cycle reuters.com. “A new industrial revolution has started. The AI race is on,” Huang proclaimed, emphasizing Nvidia sees trillions in opportunity ahead as every industry adopts intelligent systems reuters.com reuters.com. He even joked that “the buzz is: everything [is] sold out” – a reference to how completely Nvidia’s latest AI chips have been snapped up by customers reuters.com. Such exuberance from the sector’s leader helped counter some of Marvell’s gloom. Investors and analysts are now parsing which companies can live up to the hype. Valuations are lofty in many AI names (Palantir, for example, trades at over 200× forward earnings) reuters.com, so any slip (like Marvell’s) can trigger outsized drops. But the consensus by week’s end remained that the AI boom still has legs. One portfolio manager noted that “hyperscalers’ huge capex announcements” – the multi-billion-dollar investments by Amazon, Microsoft, Google, Meta, etc. – indicate we’re “in the early stages of the AI boom,” with plenty of spending yet to come reuters.com reuters.com.

Week’s End Takeaway: The two days of Aug. 28–29, 2025 showcased the euphoria and reality check of the AI-driven market. In just 48 hours, investors saw AI giants smashing records and lifting the entire market, enterprises raising forecasts thanks to AI demand, and also a reminder that expectations are sky-high – with even a hint of slowing growth punished by investors. The period featured blockbuster earnings (Nvidia, Snowflake, Dell), stunning stock moves (a 20% jump here, a 30% pop there), and pronouncements of AI’s limitless potential. It also spotlighted growing pains: supply constraints (Nvidia’s China dilemma), margin pressures (Dell’s server costs), and competitive risks (Marvell’s cloud customer challenges). From Silicon Valley to Washington to Seoul, AI was the common thread driving decisions and headlines. As August closed, the market’s message was clear: artificial intelligence is the engine of 2025’s bull run, and every development – be it a earnings beat, a new product, or a policy shift – is being viewed through that AI lens. Investors are enthusiastically betting on the winners of the AI revolution, but they’re also quick to punish any missteps. The result is high volatility but even higher conviction that the AI era is just beginning. As Nvidia’s Huang put it, “the AI race is on,” and these two days showed that no one wants to be left behind reuters.com.