Nvidia shares climbed after it beat quarterly earnings expectations on fierce demand for its sophisticated chips for powering artificial intelligence.
The solid results come amid increasing talk among Wall Street analysts of an AI bubble, with all eyes on how Nvidia, the industry’s bellwether company, will weather the doubts.
Nvidia reported profit of US$31.9 billion on record-high quarterly revenue of US$57 billion, sending shares up more than 3%.
It also took in some 60% more money in the quarter than it did during the same period the prior year, according to earnings figures.
“Blackwell sales are off the charts, and cloud GPUs are sold out,” Nvidia chief executive Jensen Huang said in an earnings release, referring to the latest model of its state-of-the-art hardware.
“The AI ecosystem is scaling fast — with more new foundation model makers, more AI startups, across more industries, and in more countries.”
Revenue in the current quarter is expected to be $65.0 billion, nearly $3 billion more than forecast by Wall Street analysts.
Most of the money brought in during the recently ended quarter came from Nvidia’s unit devoted to graphics processing units (GPUs) for data centers.
The company’s data center business generated $51.2 billion in revenue, up 25% from the previous quarter and 66% year-on-year.
In the period, Nvidia announced strategic partnerships with OpenAI to deploy at least 10 gigawatts of systems for next-generation AI infrastructure, while Anthropic will adopt one gigawatt of compute capacity using Nvidia’s latest systems.
Nvidia was valued at more than $4.5 trillion based on the number of outstanding shares.
AI industry rivals have been pouring billions of dollars into Nvidia’s prized GPUs to power the technology despite questions regarding how the investments will pay off.
Nvidia is caught up in President Donald Trump’s trade war with China, where Beijing has responded by expressing national security concerns about Nvidia chips and urging Chinese businesses to rely on local suppliers instead.
Nvidia serves as a bellwether and became the first company to reach $4 trillion in market value last July.
Earlier today, stocks steadied following heavy losses as investors awaited Nvidia earnings for further clues about whether AI-fueled valuations are justified.
The S&P 500 and Nasdaq rose in New York, while most European stock markets closed marginally lower. Oil prices slumped, while Bitcoin slipped below $90,000 and the dollar strengthened.
“The selling pressure had moderated from Monday (but) investors were unwilling to add to their overall exposure ahead of tonight’s earnings update from chip giant Nvidia,” said David Morrison, senior market analyst at Trade Nation.
Investors have endured a tough November as speculation grew that the tech-led rally this year may have gone too far, and valuations have become frothy enough to warrant a stiff correction.
With the Magnificent Seven -- also including Amazon, Meta, Alphabet and Apple -- powering recent record highs on Wall Street, there are worries that a change in sentiment could have huge ripple effects on markets.
Investors were nervous that any sign of weakness could be the pin that pops the artificial intelligence bubble, having spent months fearing that the hundreds of billions invested may have been excessive.
A Bank of America survey of fund managers found that more than half thought AI stocks were already in a bubble and 45% thought that to be the biggest “tail risk” to markets, more so than inflation.
That came after the BBC released an interview with the head of Google’s parent company Alphabet -- Sundar Pichai -- who warned every company would be hit if the AI bubble were to burst.
Investors on Wednesday also digested meeting minutes from the Federal Reserve’s late-October gathering, which showed “many” officials leaning towards keeping interest rates unchanged in December.
Such an outcome would likely anger US President Donald Trump, however, who said Wednesday that he would “love to fire” Fed Chair Jerome Powell.
Meanwhile, US retailer Target blamed sluggish consumer spending for its disappointing report early Wednesday and more indications of the state of the real economy will come from Walmart’s earnings expected Thursday morning. Target shares were down 2.8%.
In Paris, Air France shares were up 3% after officially expressing interest in taking a stake in Portuguese carrier TAP.
Oil prices fell sharply as reports of higher US reserves outweighed any concern over Ukrainian attacks on Russian oil installations.