ater is wet, the sky is blue and Nvidia continues to rake in billions.
The AI chip kingpin once again delivered eye-popping earnings results this week, beating analysts’ expectations with $57 billion in revenue for the previous quarter and forecasting $65 billion in sales for the current quarter, largely attributed to data center sales.
The earnings seemed to momentarily calm fears regarding a looming AI bubble. CEO Jensen Huang said in the company’s earnings call: “There's been a lot of talk about an AI bubble. From our vantage point, we see something very different.”
- Nvidia’s growth over the past three years has been astronomical. The company’s revenue this past quarter is seven times what it was in the same quarter of 2022, and its profit has grown more than eightfold in that time period.
- “When will the AI boom end is a question investors have been very worried about lately, but this shows we aren’t anywhere close to that,” Ryan Detrick, Chief Market Strategist at Carson Group, told The Deep View.
But Nvidia’s success might not be the singular bellwether for the state of the AI market, Roman Eloshvili, Founder of XData Group, told The Deep View. Nvidia is simply the biggest beneficiary from the growing hype, he said. The popularity of its GPUs doesn’t make it a “thermometer,” but rather “the shopkeeper selling the hottest merchandise.” And even if Nvidia is investing in the market, much of that may be going back into its own pocket via circular financing.
The determining factor of a bubble might not be Nvidia’s boom, said Eloshvili. It’s the disconnect between how much money is going into AI infrastructure and how much “real, repeatable business value” is being derived.
“I think that Nvidia isn’t the one causing that tension - it’s just collecting tolls on a road everyone’s rushing down,” Eloshvili said.