Nvidia beats earnings forecasts as investors question AI dealmaking

In short: Nvidia reported a stronger quarter than expected, but investors are paying close attention to how much money it is putting into AI deals.

What's going on

Nvidia, the chip company that supplies many of the processors used to run AI systems, just reported its latest quarterly results. Investors often treat Nvidia as a sign of how fast AI spending is growing, similar to how a busy construction supplier can hint at how much building is happening.

The company said it earned $1.62 per share, which was higher than the $1.53 Wall Street expected. It also reported $68.13 billion in revenue, above the $66.2 billion forecast.

Even with those strong numbers, some investors are uneasy because Nvidia is doing more than selling chips. It is also taking part in large funding and infrastructure deals across the AI world. Critics worry this can create “circular” relationships, where the same small group of companies sells to, invests in, and depends on each other (like a neighborhood where the same few people keep lending each other money and counting it as growth).

A key example is Nvidia’s reported interest in investing in OpenAI. The most concrete recent reporting says a proposed $100 billion OpenAI investment did not happen, and was replaced by a reported $30 billion plan tied to OpenAI’s expected IPO timeline.

What to watch

Other chipmakers have also been reporting strong AI demand, including Analog Devices, TSMC, Samsung, and SK Hynix. Many are spending more money to expand production, so the next big question is whether AI demand stays high enough to justify all this new spending.

Source: NYTimes