Global stock markets have rallied as the world’s most valuable company reassured investors of the demand for artificial intelligence (AI) and the returns companies can make.
Nvidia’s announcement of another round of record-breaking sales was “an extremely important moment in the AI Revolution thesis”, said financial services firm Wedbush.
Nvidia’s computer chips are powering much of the AI surge and are a key component in generative AI chatbots such as ChatGPT.
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Some are taking the results and the company’s forecast of strong sales to come as a clear signal that AI and tech stocks have not been overvalued, that there is no bubble waiting to burst.
Tech companies have seen their share price and valuations soar as investors hope to benefit from investment in AI. The main beneficiary has been Nvidia itself, which became the first company to be worth $5trn in October this year.
“The pure Nvidia numbers/guidance and strategic vision shows the AI Revolution is NOT a Bubble… Instead, it’s year three of a 10-year build out of this 4th industrial revolution in our view,” the Wedbush industry note read.
As investors welcomed Nvidia’s “spotless” results, in the words of trading platform Capital.com, there was clear enthusiasm for tech and AI adjacent companies on Thursday.
Across Asia and Europe, tech companies and Nvidia competitors saw their share prices rise.
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Could the AI bubble burst?
Doubts about valuations have, for now, been staved off and bubble worries soothed.
The chip maker announced $57bn of revenue in the three months to October and anticipated $65bn in sales in its next results.
It was “as comforting as a warm cup of tea on a cold day, providing investors with the energy to increase their risk appetite and giving a nice glow to the market once again”, Russ Mould, investment director at investor platform AJ Bell, said.
Risks still there
The sense of calm is unlikely to be permanent.
AI confidence has been battered in the past years by the success of China’s Deepseek AI model, the US-China trade wars and tariff fears; there’s still plenty to dent confidence.
And not everyone has been reassured by Nvidia’s latest numbers.
US trader Michael Burry, made famous for his bet on the pre-financial crash US housing market slump and played by Christian Bale in the Hollywood film The Big Short, has effectively bet that Nvidia’s share price will fall.
After the results were published, Mr Burry posted an image of major AI companies, saying: “True end demand is ridiculously small. Almost all customers are funded by their dealers.”
The statement highlights concern about deals among the big tech entities, that they’re self-fulfilling, circular and being funded by borrowed money.
