No surprise, Nvidia announced another spectacular set of results when it reported its Q4 earnings yesterday, after the US closing bell. The company posted $68.1bn in revenue, 73% higher than the same period last year, with 90% of that coming from its data-center division. Net income almost doubled, and gross margin improved to 75% — all significantly better than analysts had expected.
Addressing concerns that Google’s TPUs — designed for AI inference, far more energy-efficient and cheaper than Nvidia’s — could steal business, Jensen Huang said that his company is “the king of inference today” and that the Blackwell and next-generation Vera Rubin platforms “will extend that leadership further”, adding that adoption of agentic AI is skyrocketing.
Although his words may sound over-the-top, Huang has delivered consistently on his promises over the past three years.
Looking ahead, Nvidia projected Q1 revenue of $78bn, well above the $73bn forecast by equity analysts.
In short: The results were great, the forecast was great, the guidance was great.
Beneath the surface, the gap between revenue and cash generated also narrowed meaningfully.
Nvidia rose 3% in after-hours trading and is likely to challenge the $200+ mark at the open. If that reaction seems modest given the strength of the results, it’s because important concerns remain:
- The Coastal Journal — which had previously highlighted the gap between Nvidia’s revenue and cash, comparing its accounting practices to Enron’s — flagged again that 36% of Nvidia’s revenue now comes from two large clients.
- These clients, not explicitly disclosed, are likely among those leveraging their balance sheets to make these purchases, a point investors are growingly dislike.
So, while Nvidia delivered another blockbuster quarter, it doesn’t fully revive global risk appetite. SoftBank rebounded almost 4% in Japan this morning, but Nasdaq futures are pointing lower, trailing major US and European peers. Nvidia can keep its own head above water, but it may not drive global risk appetite alone, anymore.
In other earnings, Salesforce — closely watched amid the SaaS-pocalyptic environment — slipped 4.5% in after-hours trade despite beating analyst expectations on both revenue and EPS. Investors focused on Salesforce’s fiscal 2027 guidance, which came in just below consensus and signaled only mid-single-digit revenue growth. Many traders interpreted this as a sign that near-term growth remains tepid amid broader concerns about slowing enterprise tech spending and AI competition.
The latter may not improve appetite in software stocks.
But this could: Anthropic Claude, originally a major driver of SaaS fears, reported a hack exposing sensitive Mexican government data. This incident could at least provide support for cybersecurity stocks.
Overall, analysts worldwide have pushed back against Citrini’s earlier report predicting that AI would destroy jobs, companies and economies. Many — including myself — criticize the report as overly dramatic, bordering on science fiction.
What is less speculative, however, is the rise in private credit default risks. UBS this week increased private credit default risk warnings from 13% to 15%, noting that aggressive AI disruption could stress corporate borrowers. JPMorgan’s CEO drew parallels with the subprime crisis.
In short, AI fears may be overdone, but market reactions could temporarily amplify risks to financial assets, which is never good news.
Zooming out, the S&P 500 is set for a softer open despite gains in Asian tech indices. With waning US tech appetite, the rotation trade may need to do the heavy lifting to keep the S&P 500 positive.
This rotation trade now has a new acronym: HALO — Heavy Assets, Low Obsolescence. It suggests that companies with large physical assets are likely to attract capital flows as they are less vulnerable to rapid technological disruption, unlike many high-growth software/AI names. Investors are rotating from expensive AI and growth stocks into businesses with tangible infrastructure and long-lived assets — energy, materials, industrials, shipping, and other “real world” enterprises.
In this context, the FTSE 100 is well positioned to benefit from HALO inflows, rallying from record to record, driven by energy and mining names. Interestingly, yesterday’s inflows were strong enough to offset sterling’s strength.
In FX, the US Dollar remains under selling pressure against most majors. The EUR/USD extends gains above the 50-DMA, supported by softer-than-expected euro-area inflation, which reinforces expectations that the European Central Bank (ECB) could support European economies amid renewed external stress — yes, I’m looking at you, tariff uncertainty. The USD/JPY retraced yesterday’s advance, but yen bears remain confident given the government’s preference for a softer Bank of Japan (BoJ) policy over normalization.
In metals, Gold consolidates near $5’200, while US crude is marginally down, with tactical bulls waiting in ambush. Rising US-Iran tensions could push crude above $68pb toward $70pb, whereas easing tensions should bring it below the 200-DMA near $62.85pb.
Absent major data or events, today should focus on digesting Nvidia results and software commentary to gauge the next steps: Are the latest market risks regarding technology waning, are investors ready to jump back in, or has the valuation pullback been too soft to make technology interesting for dip buyers? I would bet on the latter.
