Tomorrow's Business: Time to turn up the Nvidia scepticism

Published by

By Simon English

Time to turn up the Nvidia scepticism

One of the few things anyone really knows about Nvidia is that it is bigger than the UK economy.

What this actually means is that the market capitalisation, $4 trillion, $5 trillion, more, is bigger than one year’s UK GDP.

That might not be a sensible comparison, but sense may have departed some time ago.

Nvidia is also bigger in that sense, than every European country, Germany included.

Can that possibly be sustainable? Is it good for the rest of us?

The AI monster’s latest figures come out after the market closes tomorrow.

Presumably they will be greeted with the usual mouths-open applause, even from people who don’t know what they are applauding.

Tristan Fletcher, founder & CEO of AI company ChAI, tells me:

“There is now a slightly strange ritual around Nvidia earnings. Officially, everyone is listening for revenue, margins and guidance. In practice, they are listening for something much bigger: reassurance.”

So Nvidia is no longer judged like a normal company. It has become the stock market’s favourite shorthand for the entire AI story. This must be dangerous.

That story goes like this: AI will transform everything; AI needs vast amounts of computing power; Nvidia supplies the crucial computing power; therefore Nvidia sits near the centre of the future. It is a wonderfully clean story, which is exactly why markets like it.

Fletcher, who should be an AI media star, predicts that reality will be messier.

“AI probably is a profound technology shift. The big cloud companies really are spending extraordinary sums. Businesses really are experimenting with AI at scale. Computing power really has become strategically important in a way that would have sounded eccentric only a few years ago. So this is not a simple case of hype with nothing underneath it.”

But the market is also doing what markets often do: taking something real and building a very large, very confident story on top of it. That story now needs regular maintenance.

Nvidia results are one of the moments when investors check whether the scaffolding is still holding.

Perhaps some better, sceptical questions need to be asked.

1) Does demand still sound urgent, or merely healthy?

2) Are customers talking about measurable returns, or just strategic necessity?

3) Is Nvidia still indispensable, or are customers quietly trying to make computing power more interchangeable?

4) And are the other big technology companies telling compatible stories, or mutually exclusive ones?

Everyone now claims to be at the centre of AI. The cloud companies think they own the customer. OpenAI thinks it owns the model layer. Apple thinks AI will live on devices.

Enterprise software firms think distribution will win. They cannot all be right.

This story needs a proper kick around tomorrow, and thereafter.

** In good news, the Hacks beat the Flaks 3-1 in the annual football match that goes back more than two decades. More than £7,500 was raised for the AFC Wimbledon Foundation which does many good things, including free-school meals.

You can read a write up and some pictures here.

Please send candidates for press release of the day to:

Simon.english@roxhillmedia.com

Questions for tomorrow

1) What can rivals learn from M&S’s data breach?

2) What would it cost to nationalise Severn Trent?

3) Are the inflation figures the calm before the storm?

4) What’s a better measure of the UK economy, Nvidia or Target?

Rolling stories

1) Unemployment rate unexpectedly rises. BBC

2) High-flying stocks defy bond gloom. FT

3) Standard Chartered to cut 7000 jobs as it steps up AI use. Guardian

4) Burnham’s plans won’t survive contact with the Treasury. Telegraph

NEXT WEEK

Q&A: How to pitch data stories to The Times

Tom Calver, Data Projects Editor, The Times

When: Wednesday 27th May, 10.30am

Where: Myo St Pauls, One New Change, London, EC4M 9AF

Buy tickets

Chaos in the government has fuelled a 133% surge in gold buying among financial professionals.

Joshua Saul CEO of The Pure Gold Company said “Customers repeatedly tell us they view the recent weakness in the gold price as a significant buying opportunity. Many believe the current price does not properly reflect the level of political and economic instability building beneath the surface.

“A growing number of customers are specifically referencing fears surrounding the political future of Sir Keir Starmer and the wider stability of the Labour government.

SEE PRESS RELEASE

We are now highlighting PR jobs in Tomorrow's Business for a small fee. Send through any roles you would like flagged to our readers – all we need is a couple of sentences on what the job is and a link to the advert, or where to apply.