LONDON (IT BOLTWISE) – The upcoming release of NVIDIA’s quarterly results is causing excitement in the markets. While some investors fear that the massive investments in artificial intelligence could create a bubble, others see it as an opportunity for sustainable growth. The results could be crucial for the future of the AI market.
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NVIDIA’s upcoming quarterly earnings release is highly anticipated as it is considered a pivotal moment for the AI market. Concerns about a possible AI bubble have intensified in recent weeks as some investors worry that tech giants’ massive investments in artificial intelligence may be overblown. These investments, which go into building data centers and equipping them with advanced chips, have significantly increased NVIDIA’s sales and profits in recent years.
Some analysts, including Michael Burry, known for his prediction of the 2007 subprime crisis, have expressed doubts about the sustainability of these investments. Burry recently revealed that his hedge fund shorted $1.2 billion in NVIDIA and Palantir shares at the end of September. This skepticism is further fueled by SoftBank’s recent decision to sell all of its NVIDIA shares, although the company emphasizes that the sale was to fund other AI investments.
The big hyperscalers like Microsoft, Alphabet and Amazon plan to invest hundreds of billions of dollars in expanding their AI infrastructure in the coming years. This spending has significantly benefited companies like NVIDIA, but some investors question whether these companies will ever recoup their investments. JPMorgan analysts estimate that it would require about $650 billion in annual revenue to generate a 10% return on these investments by 2030.
While some investors remain optimistic and bet on the long-term benefits of AI technology, there are also voices warning against excessive expectations. AMD’s recent forecasts pegging the AI chip market at $1 trillion by 2030 have caught investors’ attention, although some analysts see them as more illusion than reality. Nevertheless, the rise in AMD shares shows that enthusiasm for AI remains unbroken despite all the skepticism.
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