{"id":73805,"date":"2025-11-24T02:41:25","date_gmt":"2025-11-24T05:41:25","guid":{"rendered":"https:\/\/ubirataonline.com.br\/nvidia-didnt-save-the-market-whats-next-for-the-ai-trade\/"},"modified":"2025-11-24T02:41:25","modified_gmt":"2025-11-24T05:41:25","slug":"nvidia-didnt-save-the-market-whats-next-for-the-ai-trade","status":"publish","type":"post","link":"https:\/\/ubirataonline.com.br\/en\/nvidia-didnt-save-the-market-whats-next-for-the-ai-trade\/","title":{"rendered":"Nvidia didn\u2019t save the market. What\u2019s next for the AI trade?"},"content":{"rendered":"

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(Bloomberg) \u2014 Wall Street thought blowout earnings from Nvidia Corp (NVDA<\/a>). would calm investors\u2019 nerves about a bubble forming in artificial intelligence stocks. They didn\u2019t.<\/p>\n

Most Read from Bloomberg<\/p>\n

So where does the AI trade stand now? It depends who you ask.<\/p>\n

On one side you have the skeptics. They\u2019re concerned about soaring market valuations as investors chase growth in a small collection of stocks tied to the AI boom. They see the hundreds of billions of dollars these companies are spending to stay in the race as unsustainable, particularly as they start to take on debt in order to keep up. In addition, the circular nature of these financing arrangements creates a potential systemic risk in which one company\u2019s weakness can bring down the entire trade.<\/p>\n

The other side are the optimists, who see the recent pullback in AI-related shares as a healthy correction on the way to further growth. To them, the mega-cap technology firms at the heart of the AI trade \u2014 Microsoft Corp. (MSFT<\/a>), Amazon.com Inc. (AMZN<\/a>), Meta Platforms Inc (META<\/a>). and Alphabet Inc. (GOOG<\/a>, GOOGL<\/a>) \u2014 are going to keep spending to develop their offerings, with no signs of slowing anytime soon. Plus, with the industry\u2019s strong demand and a regulatory environment that\u2019s considered accommodating for growth, they view the AI investment cycle as just in the early innings.<\/p>\n

\u201cThere is certainly a division,\u201d said Dec Mullarkey, managing director at SLC Management. \u201cWe have had such a long bull run and valuations are stretched so the fear of a blow up in AI is high. But then there is another group of investors looking to sources of stimulus to extend the cycle, such as prospects of Fed rate cuts, less regulation, more M&A and increased IPO activity.\u201d<\/p>\n

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The uncertainty was highlighted by the stock market\u2019s wild swing Thursday in the wake of Nvidia\u2019s earnings report. The chipmaker\u2019s shares initially jumped more than 5%, supporting a host of other AI plays, before reversing direction and closing down 3.2%. The S&P 500 and Nasdaq 100 indexes responded in kind, climbing out of the gate and then quickly wiping out those gains to finish well in the red.<\/p>\n

\u201cWe saw an initial relief rally on the confirmation that demand is strong, but investors are now asking the next questions, which are, what about the power needs, what about margins, what\u2019s the ROI?\u201d said Natalie Hwang, managing partner of Apeira Capital Advisors. \u201cRelief rallies can\u2019t hold so long as the market has unanswered questions.\u201d<\/p>\n<\/p><\/div>\n