AI doomsday? Not yet. Why Nvidia results are dragging the tech bulls back to work

For weeks, markets toyed with the idea that the AI ​​boom was collapsing under its own weight. Nvidia’s latest earnings have set that narrative on fire. With what Morgan Stanley called “probably the biggest sales increase in semiconductor history,” the chipmaker fueled another global tech rally, crushed a wave of AI doomerism and reminded investors that the markets’ busiest trading is not running out of steam, but is actually accelerating.Nvidia stunned Wall Street late Wednesday with October quarterly revenue of $57 billion, $3 billion above its own expectations, and a January quarter forecast of $65 billion that beat expectations. Morgan Stanley described the quarter as a “breakthrough,” driven by a boom in Blackwell products, which contributed about $40 billion in sales as transition headwinds eased.

The brokerage noted that GB300 now accounts for two-thirds of Blackwell revenues and that Nvidia sees upside in its $500 billion GTC commentary through 2026. Despite higher wafer and DRAM costs, the company expects to maintain gross margins around 70%.CEO Jensen Huang directly addressed the AI ​​bubble story. “There’s a lot of talk about an AI bubble,” he told investors during an earnings call. “From our point of view we see something completely different.”

Huang linked that confidence to three “concurrent platform shifts”: the transition from CPU to GPU, Gen-AI reshaping existing applications, and what he described as AI creating “the next frontier of computing.” Huang also called OpenAI “one of the most consistently one-off” companies.

Also Catch: Infosys Share Buyback Live Updates Morgan Stanley said that while Nvidia shares are down 10% from post-GTC highs and trailing Broadcom, the results leave room for the company to close that gap. But it warned that broader investor concerns around AI financing and ROI remain unresolved.

Global technology stocks are retreating

The Asian markets reacted strongly. Shares of TSMC rose 3.6%, SK Hynix rose more than 4% and Samsung Electronics gained 4.5%. The Taiwanese and Korean indexes rose more than 2%, while Japan’s Nikkei rose back above 50,000, driven by a 9% rise in Advantest and solid gains in SoftBank Group and Tokyo Electron.

The rally broke through a week of heavy selling driven by concerns that valuations were unsustainably stretched and fears that cloud giants would artificially boost profits by extending the depreciable life of AI computing equipment. Nvidia’s quarter and its outlook forcibly dispel that fear.

AI doomerism needs a break

CLSA argued that the results should quiet the loudest skeptics. The brokerage pointed to a 56% increase in GPU sales year-over-year, a 162% increase in networking and a 66% increase in data center revenue, slightly more than the company’s overall growth of 62%.

The brokerage noted that Nvidia’s accelerating momentum, with fourth-quarter expectations implying 69% year-over-year revenue growth, aligns with the Token model, which tracks global consumption of inference tokens. CLSA said fears that the “lights could go out at any moment” ignore the reality that usage “explodes when there is a chip shortage,” adding that tokens will double every three months versus the previous 12-month forecast.

Also read | Nvidia’s huge profits set global tech stocks on fire. What it means for D-Street investors

CLSA also dismissed concerns about “circular deals,” arguing that “no AI accelerator has yet come out of TSMC’s factories to meet these ‘letters of intent’.” It described Nvidia’s valuation (31x forward earnings) as “staggeringly low” for a company with a GPU market share of more than 80% and reiterated its High-Conviction Outperform rating.

Nvidia’s blowout numbers have reset the tone of a jittery market and provide the strongest evidence yet that AI-powered demand is not leveling off, but deepening. With the biggest revenue increase in its history and indications of accelerating momentum, Nvidia has given investors a reason to believe the AI ​​business has even further to go.

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