Nvidia's quarterly outlook on Wednesday indicated sustained demand from tech giants like Microsoft, Amazon, and others racing to advance AI infrastructure. Despite this, the revelations did not alleviate concerns in the thriving industry significantly.
Following the release of their quarterly results, Nvidia saw a minor decline of 0.18% in Frankfurt, and a 1.5% drop in New York. Shares of Microsoft, Amazon, Meta Platforms, and Alphabet, major customers of Nvidia, remained mostly stable.
These companies, part of the so-called Magnificent Seven, have witnessed significant growth as they strive to lead in AI technology since the introduction of ChatGPT in November 2022.
Despite recent hesitations by investors, mainly due to China's DeepSeek showcasing cost-effective AI performance, Nvidia recorded a 78% increase in revenue but foresees a margin pullback to around 71% in the upcoming quarter.
Analyst Jacob Bourne from eMarketer expressed, "Nvidia's results affirm its leading position in the AI sector, supported by the advanced computing resources it offers."
However, the response to Nvidia's earnings was subdued among Asian tech firms on Thursday. Shares of key chip suppliers like Taiwan Semiconductor Manufacturing Co (TSMC) fell slightly, while Tokyo's Nikkei technology sub-index saw a marginal increase.
Market strategist Yeap Jun Rong from IG noted, "Nvidia's earnings were less volatile than expected, possibly contributing to the calm sentiment in the market."
Concerns were raised by the launch of budget-friendly AI models from DeepSeek, impacting Nvidia’s premium chip sales and leading to a sharp decline in its stock value. Additionally, Microsoft's decision to cancel some data center leases added to the unease in the market.
The Magnificent Seven stocks, including Nvidia, experienced a collective market value surge to $11 trillion before pulling back recently, with the Roundhill Magnificent Seven ETF showing an over 11% decrease from its peak in December 2024.
Despite challenges, Nvidia remains a sought-after investment option with its stock soaring approximately 1,800% in the last five years, outperforming the S&P 500 average increase of around 65% during the same period.