Media365
Wall Street will get a sense of where the billions of dollars being spent on artificial intelligence are going when Nvidia Corp reports its earnings after the bell on Wednesday. How the sinking stock market will react is another question.
“This is a ‘so goes Nvidia, so goes the market’ kind of report,” said Scott Martin, chief investment officer at Kingsview Wealth Management, which owns shares of Nvidia and several of its Big Tech peers.
Analysts expect the Nasdaq-listed semiconductor behemoth to show more than 50 per cent growth in both net income and revenue in its financial third quarter. The reason is fairly straightforward.
Microsoft, Amazon.com, Alphabet and Meta Platforms – which taken together represent more than 40 per cent of Nvidia’s sales – are projected to increase their combined AI spending by 34 per cent over the next 12 months to US$440 billion, according to data compiled by Bloomberg.
The risk is that these numbers could become unreliable if the big AI spenders – in particular, closely held OpenAI – have to pull back on their commitments.
“These players in the AI space have gone out of their way to continually raise the expectations bar, and now they have to not only deliver on the numbers, but continue to feed the market’s rising expectations,” said Michael O’Rourke, chief market strategist at JonesTrading. “It is a dangerous game for public companies to play.”
