Once again, Nvidia hit the ball way outside the park.
It reported record revenues of $18.1 billion, up 206% year on year as it continued to ride demand for its high-performance artificial intelligence chips.
Source – Market Watch
Now I don’t think I’ve encountered the term “earnings recession” before being used to describe a company data center revenue at $14.5 billion in the third quarter, up 279% from a year ago, as its biggest customers (including Google, Amazon, and Microsoft) race to build their AI capabilities.
You need to be aware of how the financial media always looks to play with your emotions.
Why? Because as history has proven over and over to me, volatility and hubris will only increase from here, a period in the 18.6-year real estate cycle that I call “The Eleventh Hour.”
I’ve Told You Time and Again There’s No Recession
There is no justification for including the word “recession” anymore with the U.S. economy firing on all cylinders.
Including the vital area of semiconductors related to Artificial Intelligence (AI).
Not long ago, the same financial media was telling you the trade sanctions against China when it came to accessing the very best AI related chips would pull the rug away from the sky-high valuation the market was placing upon the likes of Nvidia.
The thought, of course, was ridiculous.
And now, we are at the stage where the U.S. Fed wants to, and will, step right back from its hands-on control of the U.S. economy, and hand it over to the market forces that always drive the growth of the U.S. economy at this stage of the cycle.
And today’s earnings report from Nvidia confirmed such a shift.
Nvidia’s chief financial officer Colette Kress addressed concerns about the effect of new U.S. sanctions on high-performance chip exports to China offset a “significant” drop in sales to China because of recently tightened AI chip rules.
The U.S. commerce department last month announced fresh export restrictions on cutting-edge AI chips to China, affecting Nvidia’s A800 and H800 processors.
Incredibly Bullish
So whilst acknowledging export sales to the Asian country will “decline significantly,” she also said this should be “more than offset by strong growth in other regions.”
These restrictions have prompted Nvidia to design new AI chips that comply with export controls — although it is yet to formally announce them.
Is this not how a market economy is supposed to react to changes in the playing field?
It’s incredibly bullish.
You cannot afford to be sitting on the sidelines any longer.
The most important companies in our technological world today are not allowing trade sanctions to stop them from recording record profits.
And during the Eleventh Hour, this is only the start.
Regards,
Phil Anderson
Editor, Cycles Trading with Phil Anderson
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