Global Markets Kickstart: Second Wind for AI?
Second Wind for AI?
Chart of the Week: Nvidia Beats Q3 Estimates, Signals Strong AI Demand Amid Blackwell Constraints
Nvidia’s Q3 earnings exceeded expectations, but Q4 guidance hints at slowing growth CEO Jensen Huang confirmed the Blackwell production line is at full capacity, underscoring strong demand, with supply chain constraints limiting revenue growth. Q3 revenue reached $35.08B, surpassing the $33.17B forecast, with a 94% increase EPS of &0.81 beat estimates of $0.75 while gross margin at 75% exceeded expectations. Data center revenue soared 112% to %30.8B, sustaining momentum. However, Q4 guidance of $37.5B slightly exceeded the consensus estimate of $37.1B, falling short of higher market projections of $41B.
Market Recap:
U.S. Tech Stocks Recover After Nvidia Results; Utilities Lead Gains
U.S. Treasury Yields Narrow; Escalating Russia Ukraine Conflict Lifts Oil, Gas, Gold
The U.S. stock market showed a mixed trend, starting the week on a weaker note before a mild rebound following Nvidia’s earnings report The three major indices saw varied performance Among sectors, communication services suffered the steepest decline due to reports of potential operational restructuring or a split of Google, leading to a significant drop in Alphabet’s stock Consumer discretionary also faced pressure as Target revised its earnings outlook downward and issued a cautious sales forecast for the next quarter, resulting in a single day plunge of over 20%. In contrast, energy, materials, and utilities sectors outperformed, bolstered by Trump’s nomination of officials favoring traditional energy policies.
What’s Trending: Trump Administration Takes Shape; Benefits Seen for Select Sectors
As Trump prepares to assume the U.S presidency, key appointments reflecting his “America First” policies are being unveiled, focused on: (1) border security and immigration, (2) tariff hikes, (3) tax cuts, (4) financial deregulation, and (5) technology freedom and government efficiency. These policies are expected to benefit traditional energy, defense, financial, and healthcare sectors, while their implementation’s impact on the U.S. economy remains a critical watchpoint.
In Focus:
AI Spurs Hardware Demand, Supply Chain Growth Expected
AI Models, Applications, and Ad Spending See Rapid Market Growth
Despite delays in GB200 production in Q3, strong demand for H100 chips drove Nvidia’s server revenue
up 112%. Nvidia highlighted that GB200 production has now ramped up with full capacity utilization Analysts project that U.S. cloud service providers (CSPs) will exceed $250 billion in capital expenditures by 2025. AI server shipments are expected to grow 20% YoY in self-built and white label categories, pushing global AI server shipment growth to 10% YoY in 2025-the highest since 2019-signaling sustained AI hardware demand.
