Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Chief Investment Strategist
Summary: Nvidia FY24 Q3 earnings results blasted estimates as demand for its AI chips remains very strong. However, shares are indicated down 1% in US pre-market as Nvidia's comments about US export controls severely impacting its China business indicating that growth could slow down faster than expected in the short term. Nvidia's results also show that quarterly revenue is slowing down fast now getting closer to what will become the new underlying structural demand. Long-term trends in the technology sector are still in place and will underpin a strong outlook for Nvidia's business for years to come.
Yesterday’s Nvidia earnings results were the most anticipated event in equity markets as Nvidia and the generative AI growth story have been the key drivers behind the equity market rally. As we previewed in our equity note Earnings Preview: Is the ‘Intel moment’ coming for Nvidia? there are two risk building for Nvidia’s business; 1) Microsoft is rolling out its own bespoke AI chip in order to lower dependence on Nvidia and cut costs, 2) Tencent comments suggest that Chinese technology companies have significantly front-loaded orders to have enough inventory of AI chips in case the US government restricts exports in the future.
Below are the key takeaways from Nvidia’s earnings results
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