Global stock markets experienced a significant rebound of £200 billion on Thursday after the chief executive of the world’s largest company dismissed concerns of an artificial intelligence (AI) bubble.
Nvidia, a prominent U.S. technology firm heavily involved in AI deployment, reported a remarkable 62% surge in sales to £43.6 billion in the three months ending October. CEO Jensen Huang emphasized a different perspective on the perceived AI bubble.
The positive financial results spurred a market rally worldwide, with the FTSE All World Index, encompassing major global stock exchanges, climbing by 0.3%. In the UK, the FTSE 100 surged nearly 70 points during mid-morning trading, although it remains below the recent peak near 10,000.
Recent weeks saw a decline in the valuations of tech companies amid concerns of overvaluation, fueling worries of a potential market bubble burst, impacting various investors including pension funds.
Nvidia’s strong performance uplifted the shares of its competitors like Google’s parent company Alphabet and Microsoft.
Financial analyst Ben Barringer from Quilter Cheviot noted the market’s positive response to Nvidia’s results, easing concerns of growth slowdown and potentially benefiting the broader market.
However, some experts remain wary of sustained AI spending growth, suggesting that fears of a bubble may persist. Despite this, market analyst Chris Beauchamp highlighted signs of robust demand, offering investors a positive outlook.
Investment director Russ Mould at broker AJ Bell highlighted Nvidia’s reassuring results bringing stability to markets after a shaky period, with investors cautiously awaiting the outcome.
Interactive Investor’s head of investment, Victoria Scholar, praised Nvidia’s impressive earnings, which surpassed high expectations, reassuring investors and reinvigorating confidence in AI stocks.
While challenges persisted in November for Nvidia’s shares and the AI sector amid valuation concerns, Scholar emphasized that Nvidia’s earnings support the notion of justified high valuations and potential growth in AI stocks.
