Nvidia, the giant chipmaker powering artificial intelligence (AI), has just announced results that exceeded all expectations. In the three-month period ending in October, Nvidia generated revenue of $57 billion, equivalent to about 1.311 trillion Czech korunas. That represents a 62% increase from the previous year. The main driver was its data center division, where sales jumped 66% to more than $51 billion, or roughly 1.173 trillion Czech korunas. All thanks to enormous demand for chips used in AI systems.
CEO Jensen Huang said during a conference call with analysts that sales of the company's Blackwell AI systems were "off the charts" and that its cloud graphics processing units (GPUs) were completely sold out. The company expects revenue to reach around $65 billion in the final quarter of the year, once again exceeding analysts' estimates. Chief Financial Officer Colette Kress added that Nvidia would likely take even more orders beyond the already announced $500 billion.
Fears of an AI bubble have faded – at least for now
People on Wall Street have recently been worried that all the AI hype might just be an inflated bubble, similar to what happened with internet companies 25 years ago. Shares of technology giants have fallen recently – the S&P 500 dropped nearly 3% in November, while the Nasdaq fell as much as 5%. But Nvidia's results have at least partially eased these concerns. Jensen Huang said directly, "We see something completely different," and denied that it was a bubble.
Daniel Newman, an analyst at The Futurum Group, summed it up by saying that bearish theories (the pessimistic ones) are now falling apart and the AI business remains strong. Sundar Pichai, head of Alphabet (Google's parent company), admitted that there is some "irrationality" in AI investment, but according to Matt Britzman, an analyst at Hargreaves Lansdown, Nvidia does not fall into this category – the company is simply firing on all cylinders.
Market reaction
Following the earnings announcement, Nvidia shares jumped 4.9% in premarket trading. This also lifted futures for the major indexes: the Dow Jones rose 0.41%, the S&P 500 gained 1.01%, and the Nasdaq 100 climbed 1.41%. Other chipmakers followed suit – Advanced Micro Devices (AMD) gained 4.3%, while Broadcom and Marvell Technology also posted strong gains.
Megacap stocks such as Alphabet jumped 1.9%, while Meta rose 1.2%. On the other hand, Walmart, which raised its full-year forecast and plans to move its listing from the NYSE to the Nasdaq in December, still fell 1.9% in volatile trading. Palo Alto Networks dropped 3.6% after announcing the acquisition of Chronosphere for $3.35 billion, or about 77 billion Czech korunas.
Major deals and the future of AI
Nvidia is at the center of numerous major deals. Jensen Huang recently met with Elon Musk at the USA-Saudi Investment Forum, where they announced a massive data center in Saudi Arabia. It will be equipped with hundreds of thousands of Nvidia chips, and Musk's AI company xAI will be its first customer. The Wall Street Journal reports that the U.S. government approved the sale of up to 70,000 advanced AI chips to Saudi Arabia and the United Arab Emirates following talks between President Donald Trump and Saudi Crown Prince Mohammed bin Salman.
Colette Kress expressed disappointment over regulatory restrictions on exports to China, but the company is trying to maintain good relationships with developers there and elsewhere. Nvidia is now the world's most valuable company, worth $5 trillion, equivalent to about 115 trillion Czech korunas. Technology giants such as Meta, Alphabet, and Microsoft are pouring billions into AI, including data centers and chips.
What lies ahead for the market
The delayed U.S. employment report for September is due to be released today – a modest increase in jobs and an unemployment rate of 4.3% are expected, close to a four-year high. The Bureau of Labor Statistics said it would combine October's data with November's because of the government shutdown. All of this comes a day after the release of minutes from the Federal Reserve's meeting, where members disagreed over cutting interest rates. According to the CME FedWatch Tool, the probability of a December rate cut has now fallen to 34% from the previous 50%. Five Fed officials are scheduled to speak today.
Simon French of Panmure Liberum noted that the parallels with the dot-com bubble lie in the fact that not all tech companies are profitable, but Nvidia is among those generating cash. Eileen Burbidge of Passion Capital spoke about circular deals between companies such as Nvidia, OpenAI, and Anthropic, where investments flow back in circles – for example, Nvidia invested $100 billion in OpenAI, the creator of ChatGPT.
Source: bbc.com
