- Investors eye Santa rally to close out 2025 after ‘AI bubble’ wobble
Global stock markets were buoyed after blockbuster earnings from chip giant Nvidia calmed anxiety over a growing ‘AI bubble’.
Nvidia boss Jensen Huang dismissed concerns that the artificial intelligence boom is running out of steam as the $4.5trillion market cap firm surpassed market expectations with revenues of $57billion for the third quarter.
‘There has been a lot of talk about an AI bubble. From our vantage point we see something very different,’ Huang said late on Wednesday.
And the chip giant expects to grow revenues to $65billion in the current quarter, reviving investor hopes for a so-called ‘Santa rally’ in global stock markets to top off a bumper 2025.
The FTSE 100 closed up 0.2 per cent after losing more than 4 per cent over the last week. But optimism faded in the US, where the S&P 500 was trading down 0.75 per cent by 6.30pm London time.
Nvidia shares bounced in after hours trading but was down 1.7 per cent this evening.
What bubble? Nvidia says demand for its chips is still booming
European stocks were up, with France’s CAC and Germany’s Dax adding 0.3 and 0.5 per cent, respectively.
Overnight, Japan’s Nikkei 225 led gains in Asia, adding 2.7 per cent.
Ben Barringer, head of technology research at Quilter Cheviot, said Nvidia’s bumper earnings were ‘just what the market wanted after a nervous couple of weeks’.
He added: ‘Nvidia has done well to assuage any fears that it was beginning to slow its growth and as such the rest of the market will respond accordingly.
‘Given so much hinged on this latest set of results, and given the success of them, investment markets may just see a Santa rally in December after all.’
However, senior financial market analyst at Capital.com Kyle Rodda cautions that ‘the artificial intelligence overinvestment and overvaluation story’ on only one part of a ‘two-part story’ that will define the final weeks of 2025 for investors.
He said: ‘The other part is the Fed rate outlook story. FOMC minutes were released overnight and showed division on the committee about the path forward for US interest rates.
‘Traders continue to price out the odds of a December rate cut as a result, with the implied probabilities now falling to 33 per cent.
‘The markets will now turn to the belated release of the September US jobs report in US trade to get a slightly better gauge on December rate cut probabilities.’
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