Nvidia Beats Expectations On AI Demand, Global Markets Rise In Response

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  • Nvidia tops expectations, shares rise 6.6%
  • FTSE 100 set to have a bright Thursday
  • Recruitment giant Hays sees fees stagnate in UK & Ireland
  • Weak US PMI data raises hopes that Fed tightening cycle is coming to an end
  • Chances of Wilko deal fade in another blow to the high street
  • Softness in oil trading continues amid demand concerns

Nvidia Tops Expectations

“Despite a very high benchmark, NVIDIA Corp (NASDAQ:NVDA) has beaten Wall Street’s expectations. The artificial intelligence boom is continuing to catapult demand for the tech company’s complex chips into the stratosphere, with sales of $16bn expected in the three months to October. That is streets away from analyst expectations and reflects the seemingly insatiable appetite for Nvidia’s products, which are the leading option for creating AI tools like ChatGPT.

Nvidia’s H100 chip, where demand is far outpacing supply, is currently selling for double its original price in the tens of thousands. Being an early beneficiary of a megatrend like AI is an enviable and rare opportunity, but bears will be arguing that at some point the valuation will start to appear full. Luckily for Nvidia, a cursory glance would suggest there aren’t many bears around.

A Bright Start For FTSE 100

Nvidia smashing the forecast ceiling has also lifted the mood elsewhere. The FTSE 100 is off to a bright start where there’s little big-hitting domestic news to sway the atmosphere. Also in the UK, recruitment giant Hays has seen a sharp slowdown in the market in the UK & Ireland, where fees only rose 1% for the full year. The difficulties are largely being felt in permanent positions, in a signal that the UK’s watertight labour market might be loosening.

The Fed Is Nearing The End Of Its Hiking Cycle

Elsewhere, US futures are in a bright mood, with the Nasdaq 100 and S&P 500 rising 0.9% and 0.5%, as they too ride the Nvidia wave. There’s also growing hope that the Federal Reserve is nearing the end of its rate hiking cycle as weaker than expected PMI data comes through. This broader hope has also propped up trading in the UK and Asia.

Chances Of Wilko Deal Fade

High street heritage brand Wilko is closer to collapse after a deal fell through to save it. Most stores are now expected to close with large scale job losses. Despite the lower value of its products, customers haven’t flocked during the cost-of-living crisis and the chain has failed to patch up damage caused by inflation and supply chain problems.

Further casualties on the high street aren’t a welcome development, but they also sadly aren’t a surprise given the highly difficult consumer backdrop. Images of more boarded up shops in town centres is not what communities want, and the focus should now turn to how vacant premises can be used.

Softness In Oil Trading Continues

Brent crude prices have fallen for the fourth straight session, now at just under $83 a barrel. Business activity in the US almost stagnated in August, while the UK and Europe contracted. This creates very real questions around demand, causing the slide.”

Article by Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown