Nvidia’s shine is fading. Two years ago the firm beat analyst revenue forecasts by a shocking 53%. Now it’s just meeting them. Albeit by still pumping out decent growth numbers. Boring nonetheless based on market reactions.
Despite analyst apathy, Jensen Huang still has plenty of reason to swagger around conferences in a leather jacket. That’s because fresh streams of cash are flowing to AI infrastructure firms—many of which Nvidia has an interest in.
A recent winner is Amsterdam based Nebius Group, a company that provides servers, data centers and other AI plumbing to developers, and also happens to be Nvidia-backed and packed full of Nvidia hardware. The firm has just signed a contract with Microsoft worth well over $19bn. Its stock shot up over 60% on the news.
This change in fortunes tells us one important thing: concerns about an AI winter are likely overplayed. There’s still plenty of investment cash splashing around, and Microsoft’s latest deal with Nvidia suggests they expect demand to remain strong through to 2031, when the deal ends or is renewed.
A more sceptical perspective is that, due to substantial sunk costs in AI, major tech firms are pushing hard for its success—by pricing services into unsustainably low license fees and increasing investments in infrastructure. Similar to how private equity once propped up unviable digital businesses, financials seem less important than making AI work today. But that may be an important step in the AI revolution nonetheless
