Nvidia’s rise and influence over markets fuels fears of an AI bubble

Madrid (EFE) – The accelerated growth of processor maker Nvidia and its strong influence on stock markets around the world has raised fears among analysts and investors that an artificial intelligence (AI) bubble may be brewing.

The presentation of the results of the American technology giant this week became a global event. “Nvidia sets the pace for markets,” Banca March headlined its daily report on Thursday.

“The Most Important Actions on Planet Earth”

Nvidia stock is “the most important stock on planet Earth,” Goldman Sachs stressed a few days earlier.

The processor maker made a profit of $29,760 million (€27,487 million) last year, up 581% from 2022, according to Wednesday’s earnings report.

Revenue increased by 126% to $60.922 million (€56.270 million). “Accelerated computing and generative artificial intelligence have reached an inflection point.

“Demand is growing around the world,” said Nvidia founder and CEO Jensen Huang.

It’s skyrocketing in the stock market.

The company soared on the stock market after the results were released, with its capitalization on Friday topping $2 billion (€1.8 billion) – a level so far surpassed only by Saudi oil company Aramco and US tech companies Microsoft and Manzana. .

On Thursday, Nvidia increased its capitalization by $277 billion in a single session and surpassed the previous record set by Meta on February 2 by $200 billion.

The shock wave lifted the prices of other major companies in the sector and caused euphoria in stock markets, where indices in the US, Asia and Europe such as the S&P 500, Nikkei, DAX or CAC 40 reached record highs. .

Doubts about the existence of a bubble

In this context, analysts have begun to wonder whether the growth rate of Nvidia and its artificial intelligence business is sustainable.

“Doubts about the possibility of an artificial intelligence bubble crop up periodically among investors these days,” says David Rainville, fund manager at Sycomore AM, a company linked to Generali Investments.

Rainville’s own answer is negative, albeit nuanced: “If you think about the enthusiasm generated by artificial intelligence, it is possible that a bubble will form over time.

But we believe that we are only at the beginning,” he explains.

can this continue?

As an example, the manager cites the evolution of Nvidia itself. The processor maker is trading at less than thirty times expected 2025 earnings per share (EPS), well below the figure it achieved during the Covid-created tech bubble.

“In our opinion, investors can still invest in artificial intelligence,” Rainville concludes. Josh Gilbert, an analyst at the investment platform eToro, speaks in the same spirit.

“The big question for investors is: Can this continue? In short, yes,” he says.

“Nvidia continues to perform across the board and its results show it still has strong growth potential.

“This is not an outbreak or a bubble, but rather a business that continues to make a lot of money,” Gilbert says.

XTB’s Joaquín Robles predicts that AI businesses will continue to grow at a high rate in the coming years.

“I think we won’t see any bubble; we may see a correction or stabilization,” he notes. Luis Francisco Ruiz, an analyst at CMC Markets, acknowledges that Nvidia’s results and stock market performance are “exceptional,” although he clarifies that the numbers “do not look like a bubble.”

Ruiz reminds us that the artificial intelligence sector is “not stopping growing” and that Nvidia is working in other segments that provide “great value”, such as graphics cards.

Sergio Avila, an IG analyst, echoes this diagnosis. “In a world increasingly driven by artificial intelligence, demand for data center chips and GPUs has reached unprecedented levels.” According to Avila, Nvidia has “smartly capitalized on this trend, dominating the global market for artificial intelligence chips.”