Zhi Tong Cai Jing·2025-11-24 00:13Core Viewpoint - The explosive earnings report from Nvidia did not alleviate investor concerns about a potential AI stock bubble, leading to a divided market sentiment regarding the current state of AI trading [1][5]. Group 1: Market Sentiment - Skeptics worry that the market valuations of AI-related growth stocks have soared to dangerous levels, with concerns about the sustainability of the massive investments required to maintain competitive positions [1][3]. - Optimists view the recent pullback in AI stocks as a healthy adjustment before further gains, believing that major tech companies will continue to invest in AI development without signs of slowing down [1][2]. - Market volatility was highlighted after Nvidia's earnings report, with initial gains followed by a significant drop, reflecting uncertainty among investors regarding future profitability and energy demands [2][5]. Group 2: Financial Performance and Projections - Nvidia's strong earnings report was anticipated due to prior disclosures of spending plans from major clients like Microsoft, Amazon, Meta, and Alphabet, which collectively account for over 40% of Nvidia's sales [3]. - These major clients are expected to increase their capital expenditures by 34% over the next 12 months, reaching $440 billion [3]. - Despite Nvidia's solid performance, other semiconductor companies have faced challenges, with the semiconductor index down 11% in November, marking the worst monthly performance since 2022 [3][5]. Group 3: Investment Returns and Concerns - Investors are increasingly questioning the return on investment (ROI) for AI software and services, with the timing of when substantial investments will translate into growth and profitability being a critical issue [4][5]. - Concerns about the sustainability of large capital expenditures have led to significant stock price declines for companies like Meta and Microsoft, with declines of 21% and 13% respectively since their earnings reports [5]. - Companies with weaker balance sheets, such as CoreWeave and Oracle, have experienced even more severe stock price drops, indicating heightened scrutiny on their financial health [5]. Group 4: Broader Economic Context - The macroeconomic uncertainty and differing views on the stage of the AI revolution contribute to the observed market volatility, compounded by the collapse of cryptocurrency markets [6].