Nvidia
The story was similar for Microsoft, which posted earnings days later. Despite reporting a 15% year-on-year revenue jump to $64.7 billion, CFO Amy Hood told analysts that returns from AI should be expected in “the next 15 years and beyond.”
For those who favor AI’s long-term prospects, the patience being asked of them will be worthwhile.
Wedbush analyst Dan Ives, who has called Huang the “godfather of AI,” expects Wednesday’s results to be “another drop-the-mic moment for tech” as Nvidia talks up demand through 2025.
Bubble territory
But it’s not clear everyone feels that way, which brings us to the second reason investors are anxious: more and more of them have a gut feeling that the broader AI market is in bubble territory.
Earlier this month, The Financial Times reported that hedge fund Elliott Management told investors that Nvidia stock was “overhyped,” and it was “skeptical” about the relentless Big Tech demand for GPUs.
A June report from Goldman Sachs also suggested the industry was in bubble territory. Jim Covello, the bank’s head of global equity research, said that although “bursting today’s AI bubble may not prove as problematic as the bursting of the dot-com bubble,” given that big AI spenders are “better capitalized,” it could be a problem if AI “ends up having fewer use cases and lower adoption than consensus currently expects.”
That brings us back to Nvidia. If the company forecasts chip demand to be as hot as ever, expect short-term anxieties to fade away. It’ll signal that its customers still have every intention of building AI that proves to be industry-shaking and profit-making.
Anything else, however, could mark the start of a much more difficult chapter in the AI story.