On the fundamental side: Nvidia's performance served as a test of the AI narrative, providing a temporary respite for the market. Strong investment demand for artificial intelligence (AI) infrastructure expansion, driven by massive capital expenditures, led to data center revenue increasing to $51.2 billion, exceeding the expected $48.62 billion. Fourth-quarter revenue is projected to reach $65 billion, plus or minus 2%, while the average analyst estimate is $61.66 billion. The huge demand for GPUs has reassured upstream infrastructure investment (everyone is building highways). Investors will continue to focus on whether large-scale enterprises can quickly utilize this capacity (the same old story logic – once the highways are built, how many cars can run on them?).
Huang believes the AI ecosystem is expanding rapidly, with more new basic model developers, more AI startups, and coverage of more industries and countries. At least for now, my feeling is that the AI startup wave is very hot.
On the denominator: The released minutes of the Federal Reserve meeting show that the Fed made the decision to cut interest rates in October amid significant internal disagreement. Details in the minutes suggest that a significant portion of the 19 Fed members opposed a further rate cut in December at the previous meeting.
November employment data will be released on December 16th, meaning another month-long gap in employment data. Furthermore, the October data sample is missing, and a complete employment report will not be released.
In summary, the upstream numerator remains strong, while the downstream sector cannot yet confirm whether there is a bubble. The denominator does not support further valuation expansion.
Overall, equities revolve around performance; without a strong numerator (whether factual or expected), they will be relatively weak.