"Fears of a growing bubble around the artificial intelligence frenzy resurfaced on Thursday as leading US stock markets fell, less than 24 hours after strong results from chipmaker Nvidia sparked a rally. Wall Street initially rose after Nvidia, the world's largest public company, reassured investors of strong demand for its advanced data center chips. But the relief dissipated, and technology stocks at the heart of the AI boom came under pressure."
"While Nvidia's highly anticipated earnings exceeded expectations on Wednesday, as the chipmaker continues to enjoy robust demand, concerns persist around the firms using those chips to invest in AI, spending heavily and driving that demand. The people who are selling the semiconductors to help power AI doesn't alleviate the concerns that some of these hyper-scalers are spending way too much money on building the AI infrastructure, said Robert Pavlik, senior portfolio manager at Dakota Wealth."
Leading US stock markets fell after a short-lived rally following Nvidia's strong results, with the S&P 500 down 1.6%, the Dow down 0.8% and the Nasdaq down 2.2%. Global markets showed mixed moves, with the FTSE 100 up 0.2%, the Dax up 0.5% and the Nikkei rising 2.65%. Nvidia, valued near $4.4tn, has driven an extraordinary surge in AI-related firm valuations. Firms are increasing spending on chips and data centers to build AI capabilities, prompting fears of a speculative bubble as some hyper-scalers may be overspending on infrastructure. A mixed US jobs report reinforced expectations of a Fed rate hold in December, while Nvidia shares slipped 3.2% and the VIX climbed 8%.
Read at www.theguardian.com
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