European stocks flatline in Nvidia afterglow as markets weigh AI demand

European equities remained stagnant on Thursday, hovering near one-week highs as investors weighed Nvidia's impressive financial results against broader industry caution. The pan-European Stoxx Europe 600 Index edged down by 0.1%. Germany's DAX, France's CAC 40, and London's FTSE 100 all remained flat, with the latter two experiencing slight declines of 0.2% and 0.4%, respectively.

Nvidia, a Santa Clara, California-based firm, reported quarterly revenue that more than doubled year-on-year, driven by surging demand for artificial intelligence hardware. CEO Jensen Huang reiterated the company's bullish outlook, forecasting significant growth for the coming year. Nvidia's current-quarter revenue guidance surpassed Wall Street expectations, with management projecting approximately 70% revenue growth for fiscal 2028, far exceeding the consensus estimate of 44%.

Shares of the world's most valuable company surged by up to 5.6% in after-hours trading, marking the stock's first positive post-earnings reaction in several quarters and ending a pattern of sell-the-news price action.

Regional suppliers, such as semiconductor-equipment giant ASML Holding NV, benefited from Nvidia's growth, rising by 2.5%. Other chipmakers, including STMicroelectronics NV, Infineon Technologies AG, and BE Semiconductors, also saw gains of between 2% and 4%, as they stand to profit directly as global tech hyperscalers increase capital expenditures to secure hardware allocations.

Meanwhile, German consumer sentiment improved ahead of September, according to a joint report by the Nuremberg Institute for Market Decisions (NIM) and the GfK market research institute. The consumer sentiment index rose to -26.6 points, showing gains in economic and income expectations as households' persistent caution on discretionary spending was offset.

This development suggests that private consumption in Europe's largest economy may gradually recover as real wage growth catches up with inflation. Oil prices slid for the fourth consecutive day, following reports of renewed Middle East peace talks. Brent crude fell by 0.5% to $87.40 a barrel, on track for its fourth straight daily decline.

The downward pressure resulted from hopes of a diplomatic solution to the ongoing tensions between the U.S. and Iran, as well as ongoing discussions between Iran and Oman regarding commercial transit through the Strait of Hormuz, which has helped de-escalate fears of supply disruptions in the vital shipping route.