Nvidia’s latest earnings, a gleaming beacon of artificial intelligence hype, should have been a shot of adrenaline for markets. Instead, the response was a shrug. The chipmaker’s revenue surged 265% year-on-year, yet the FTSE 100 barely budged, and tech stocks from London to Frankfurt took a hit.
British investors, ever the sceptics, saw through the numbers. The problem? The market is already priced for perfection.
Nvidia’s forward P/E of 30 leaves no room for error, and with the Bank of England holding rates at 5.25%, the discount rate on future cash flows is unforgiving. Capital is fleeing to bonds, where 10-year gilts offer a risk-free 4.
5%. The AI boom is real, but so is the hangover. Investors are asking: can Nvidia sustain this growth when hyperscalers like Amazon and Microsoft start building their own chips?
The rally is running on fumes. For the City, this is a classic case of ‘buy the rumour, sell the fact’. The earnings were stellar, but the market’s fatigue signals a broader unease.
Fiscal responsibility be damned; the government’s borrowing binge is crowding out private investment. Until gilt yields stabilise, tech will remain a treacherous trade.
