Introduction: Nvidia shrugs off AI bubble fears
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
It’s one risk event down, one to go, for investors today after Nvidia calmed nerves with some sizzling financial results.
The chipmaker at the heart of the artificial intelligence boom calmed fears of a bursting bubble – and pushed markets higher – by beating Wall Street forecasts, and giving a strong forecasts for its future performance.
Jensen Huang, founder and CEO of Nvida, tried to squish bubble fears, declaring that “We’ve entered the virtuous cycle of AI”
Huang told analysts last night:
“There’s been a lot of talk about an AI bubble.
From our vantage point, we see something very different. As a reminder, Nvidia is unlike any other accelerator. We excel at every phase of AI from pre-training to post-training to inference.”
Sales are up 62% year-over-year, reflecting the massive demand for its chips to power AI systems. The company reported $51.2bn in revenue from data-center sales, beating expectations of $49bn.
And crucially for market sentiment, Nvidia sees faster growth than expected. It is projecting fourth- quarter revenue of around $65bn; analysts had predicted the company would issue guidance of $61bn.
Nvidia’s shares jumped 5% in after-hours trading. Kyle Rodda, senior financial market analyst at capital.com, calls the results “practically spotless”, explaining:
The stock is up after hours and that’s pushed US futures higher, with Asian stock markets likely to follow suit. Something could go wrong as investors parse the details over the course of the day. However, after a torrid few weeks of trade, especially over the last three days, to paraphrase Ice Cube, today could be a good day.
Nvidia’s strong results may calm anxiety that the valuations of companies in the AI revolution have risen dangerously high, leaving the markets vulnerable to a crash. Those worries had heightened after two major investors – SoftBank and Peter Thiel – recently sold their stakes in Nvidia.
Asia-Pacific markets have rallied today (more on that shortly), and European bourses are set to open higher.
Also coming up today
The second fear which hit share prices in recent days is that US central bankers may not cut interest rates as quickly as hoped.
The long-awaited US jobs report for September is finally due to be released today, and should give insight into whether the labour market has continued to cool.
September’s Non-Farm Payrolls report is expected to show a rise of 50,000 jobs with the unemployment rate remaining at 4.3%. A weak reading might nudge the Federal Reserve towards a December rate cut…
The agenda
-
9.30am GMT: ONS data on young people not in education employment or training
-
10a, GMT: Eurozone construction data for September
-
1.30pm GMT: US non-farm payroll report for September
-
3pm: US home sales data for October
Key events
Deutsche Bank: Nvidia results have completely changed the market mood
After several weak trading sessions, Nvidia’s results have changed the mood in the markets, says Jim Reid, market strategist at Deutsche Bank:
He told clients this morning:
In a market baying desperately for information, today’s US payrolls follows rapidly on the back of Nvidia’s earnings last night and the start of the return to business as usual for US data.
It’s fair to say that Nvidia’s results have completely changed the market mood and pushed out any bubble fears for another day. The chipmaker delivered a decent revenue beat ($57.0bn vs $55.2bn estimate) and gave strong revenue guidance for the current quarter ($65bn vs $61.9bn est.).
The company’s CFO suggested that Nvidia could even exceed its recent target of $500bn of revenue for the next few quarters.
Asia-Pacific stocks soar on Nvidia relief
A relief rally has swept across Asian markets today after Nvidia’s market-topping earnings cheered investors.
Nvidia’s CEO Jenson Huang’s upbeat forecasts about the future of the AI also helped to send shares roaring higher in Japan, where the Nikkei index is up 2.6%.
South Korea’s KOSPI index is up 2%, while Taiwan’s TW50 index has jumped by 3.6%.
Ipek Ozkardeskaya, senior analyst at Swissquote, says Nvidia has delivered another set of impressive – and record-breaking – results, adding:
What might have made a difference in the market’s reaction is Huang saying that “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. AI is going everywhere, doing everything, all at once.”
Introduction: Nvidia shrugs off AI bubble fears
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
It’s one risk event down, one to go, for investors today after Nvidia calmed nerves with some sizzling financial results.
The chipmaker at the heart of the artificial intelligence boom calmed fears of a bursting bubble – and pushed markets higher – by beating Wall Street forecasts, and giving a strong forecasts for its future performance.
Jensen Huang, founder and CEO of Nvida, tried to squish bubble fears, declaring that “We’ve entered the virtuous cycle of AI”
Huang told analysts last night:
“There’s been a lot of talk about an AI bubble.
From our vantage point, we see something very different. As a reminder, Nvidia is unlike any other accelerator. We excel at every phase of AI from pre-training to post-training to inference.”
Sales are up 62% year-over-year, reflecting the massive demand for its chips to power AI systems. The company reported $51.2bn in revenue from data-center sales, beating expectations of $49bn.
And crucially for market sentiment, Nvidia sees faster growth than expected. It is projecting fourth- quarter revenue of around $65bn; analysts had predicted the company would issue guidance of $61bn.
Nvidia’s shares jumped 5% in after-hours trading. Kyle Rodda, senior financial market analyst at capital.com, calls the results “practically spotless”, explaining:
The stock is up after hours and that’s pushed US futures higher, with Asian stock markets likely to follow suit. Something could go wrong as investors parse the details over the course of the day. However, after a torrid few weeks of trade, especially over the last three days, to paraphrase Ice Cube, today could be a good day.
Nvidia’s strong results may calm anxiety that the valuations of companies in the AI revolution have risen dangerously high, leaving the markets vulnerable to a crash. Those worries had heightened after two major investors – SoftBank and Peter Thiel – recently sold their stakes in Nvidia.
Asia-Pacific markets have rallied today (more on that shortly), and European bourses are set to open higher.
Also coming up today
The second fear which hit share prices in recent days is that US central bankers may not cut interest rates as quickly as hoped.
The long-awaited US jobs report for September is finally due to be released today, and should give insight into whether the labour market has continued to cool.
September’s Non-Farm Payrolls report is expected to show a rise of 50,000 jobs with the unemployment rate remaining at 4.3%. A weak reading might nudge the Federal Reserve towards a December rate cut…
The agenda
-
9.30am GMT: ONS data on young people not in education employment or training
-
10a, GMT: Eurozone construction data for September
-
1.30pm GMT: US non-farm payroll report for September
-
3pm: US home sales data for October
