International markets reacted positively to yesterday’s stronger than expected results from Nvidia, but it may not be enough to ward off growing AI bubble concerns.
Despite some caution ahead of Nvidia results yesterday, the chips giant sailed past forecasts with record revenue for the third quarter of $57bn, up 2pc on the previous quarter and up 62pc year on year.
“Blackwell sales are off the charts, and cloud GPUs are sold out,” said Jensen Huang, founder and CEO of Nvidia who was typically enthusiastic, and keen to dismiss the much touted AI bubble fears. “Compute demand keeps accelerating and compounding across training and inference, each growing exponentially. We’ve entered the virtuous cycle of AI.”
“The AI ecosystem is scaling fast, with more new foundation model makers, more AI startups, across more industries, and in more countries,” he continued. “AI is going everywhere, doing everything, all at once.”
In yesterday’s call with analysts, Huang recognised that there had been much talk of a bubble, but he said: “From our vantage point we see something very different.”
It has certainly reassured the markets, with some commentators seeing it as evidence that there is no bubble. However, Nvidia is just one player – albeit a central and powerful one – in a much wider ecosystem, so the cautious among us are warning it would be wise to not read too much into such quarterly gains.
Nvidia forecasts for the current quarter also beat analysts expectations at $65bn, several billion higher than predicted, and Nvidia shares were up some 5pc in after-hours trading.
The contagion set in quickly with Asian markets opening up this morning, according to the Financial Times. Japan’s Nikkei 225 index was up 3.7pc and South Korea’s Kospi advancing 2.2pc. Meanwhile Bloomberg reports that European stocks recovered from a five-day drop, with the Stoxx Europe 600 Index rising 1pc first thing this morning, and technology shares outperforming the rest of the market.
The Nvidia results come at a time when markets have been extremely jittery, with drops in technology share values, and even Bitcoin hitting a seven-month low earlier this week. It’s a short term relief to many in the markets but is unlikely to halt the growing concerns of unsustainable gains in other AI-related stocks.
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