This week, everyone is discussing Nvidia’s results against the backdrop of their phenomenal impact on the market. Thanks to this, the company raised the S&P 500 and Nasdaq to levels not seen in a year, with growth of 2.2% and 3.0%, respectively, and set new all-time highs. This is a quick review from Ivan Kompan, Edinburgh Business School analyst.
Nvidia surprised the market with its quarterly results: revenue and profit exceeded forecasts, and the company confirmed its intention to move forward in chip manufacturing. Investors were nervous before the announcement, but after the results exceeded expectations, the stock rose sharply, setting records and dragging the markets along with it.
According to Jensen Huang, CEO of Nvidia, artificial intelligence (AI) is becoming a new direction in development and computing. This is confirmed by the growth of investments in AI from Meta, Amazon, Microsoft, and Google. The demand for Nvidia products is higher than the supply, which includes future products planned for the company’s conference in a month. Huang also predicts a doubling of data centers in the world over the next five years, which is good news for Nvidia, which controls 80% of the AI chip market according to The Wall Street Journal.
But there are several worrying aspects about Nvidia. Firstly, the company’s major customers are actively investing in the production of their own chips, which may reduce their dependence on Nvidia. Second, competition in the chip market in America and Asia is growing, threatening Nvidia’s dominance. Thirdly, bans on the sale of Nvidia’s most powerful chips in China may increase due to tense relations between the countries.
Another thing is the stock price. Even if the AI industry is as big as predicted, it doesn’t mean that it’s worth investing in these companies’ stocks today. History shows that many of the companies that were once at the top are not so much now. And some, although alive and well, such as Cisco Systems, which twenty-four years ago was unanimously considered by Wall Street bankers to be “the most important company on the planet” and the Internet world could not imagine its existence without it, are still cheaper in terms of their current share price than they were almost a quarter of a century ago.”
But all this will happen, or maybe not, in the future. But today, those who have invested in Nvidia and have already made great money on it are celebrating! We can only wish that such celebrations in the market “always stay with you”.
*And finally, we would like to remind you that the information you have just listened to is not an investment advisory. Remember – investments in the stock market are always tied up with financial risks. So be careful and cautious.
