NEW ORLEANS – A strong earnings report from Nvidia is helping stabilize investor confidence after weeks of turbulence in AI-related stocks.
Nvidia delivered stronger-than-expected third-quarter results, offering reassurance to investors who have questioned whether the rapid growth of the artificial intelligence sector is sustainable. The company reported $57.01 billion in revenue for the quarter, surpassing analyst expectations of $54.92 billion.
Data center revenue, a key measure of AI demand since these chips run most large-scale AI training and cloud-computing systems, reached $51.2 billion, also ahead of projections.
According to the AP, global markets have risen following Nvidia’s better-than-expected quarterly earnings, which helped ease concerns that the recent run-up in AI-related stocks may be overextended. Futures or contracts that indicate how major indexes are expected to open for the S&P 500 were up 1.2% in early trading. Dow Jones Industrial Average futures increased 0.5%, reflecting renewed investor confidence after the chipmaker’s strong results.
CEO Jensen Huang said the company is seeing strong demand for its newest generation of AI chips, known as Blackwell which power many of the advanced systems behind current AI models, along with the graphics processors used in cloud computing. He said orders are coming in so quickly that Nvidia has already sold out of its available supply.
Nvidia forecasts $65 billion in revenue for the current quarter, above the $61.66 billion anticipated by analysts. Nvidia shares rose 5% in after-hours trading following the earnings release.
Investor Anxiety After Weeks of AI Selloffs
The results follow several weeks of selloffs across AI-focused stocks. Among the investors who recently sold their Nvidia shares was a hedge fund backed by Peter Thiel, the tech investor best known for co-founding PayPal.
Another high-profile investor, Michael Burry, who is widely recognized for predicting the 2008 housing market collapse, took a different approach. He disclosed that he bought “put options” tied to Nvidia, citing concerns about a potential AI-driven market bubble. Purchasing “put options” is a financial strategy that increases in value if the stock price declines.
Together, these moves fueled investor anxiety ahead of Nvidia’s report, as some feared signs of an AI bubble.
A Big Tech Web of Dependencies
Nvidia’s performance also has broader implications for the technology sector. Since October 2022, the S&P 500’s gains have been driven largely by a small group of dominant tech companies known as the “Magnificent Seven.” These firms account for most of the index’s growth, illustrating how much the broader market depends on their performance.
Nvidia sits at the center of this ecosystem. Major companies within the Magnificent Seven — including Amazon, Alphabet, and Meta — account for more than 40% of Nvidia’s sales, creating a high level of interdependence. That connection is amplified by the billions flowing among other major players such as OpenAI, CoreWeave, AMD, Microsoft, and Oracle, all of which are investing heavily in new AI infrastructure.
Nvidia’s Size Moves the Entire Market
The concentration of investment activity has raised concerns that any slowdown in AI infrastructure spending by major technology companies could have ripple effects across the broader market. That risk is amplified by Nvidia’s size. The company is now the largest stock on Wall Street, having briefly exceeded $5 trillion in value.
Because of its weight in the S&P 500, movements in Nvidia’s share price influence the index more than any other stock. On some trading days, it can effectively steer the direction of the entire market. As a result, any significant change in Nvidia’s valuation can impact retirement accounts, index funds, and institutional portfolios that track the S&P 500.
While this latest earnings report has temporarily eased fears of an AI downturn, broader questions about the strength of the economy remain, particularly as investors await the delayed September jobs report because it will offer the first major reading on whether the broader economy is slowing.
