Introduction: Nvidia fails to wow Wall Street with blockbuster quarter
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
What’s a tech firm gotta do to get a share price bump these days?
Nvidia may be asking that question after reporting strong earnings last night, alongside a solid growth forecast, only to receive a shrug from Wall Street.
The chip-making firm certainly had another extremely strong quarter – it posted record quarterly revenue of $68.1bn for October-December 2025, up 20% compared with the third quarter of last year and a sizzling 73% more than a year earlier.
The company said sales were being driven by accelerated computing and AI, with customers scrambling to get their hands on its high-powered Blackwell chip.
Jensen Huang, founder and CEO of Nvidia, told investors that take-up of AI agents by companies was accelerating:
“Enterprise adoption of agents is skyrocketing. Our customers are racing to invest in AI compute — the factories powering the AI industrial revolution and their future growth.”
Nvidia also predicted another jump in sales in the current quarter, when revenue is expected to rise to $78.0bn, beating forecasts.
But while its shares did briefly rally in after-hours trading when the results hit the wires, this didn’t last – the stock then turned negative, and finally finished just 0.2% higher.
As Jim Reid of Deutsche Bank puts it:
The initially positive reaction faded as the company’s conference call offered limited detail on the revenue outlook, leaving the chipmaker’s shares little changed by the end of extended trading. So perhaps a sign of investors’ increased anxiety over AI valuations.
Nvidia’s problem is partly that its share are already ‘priced for perfection’ – up 1,300% over the last five years. So even stellar sales growth is already priced in.
Also, these results landed in a market where investors are fretting that AI will drive up white-collar unemployment, take business away from software-as-a-service companies, payment providers and travel and estate agencies, and trigger a mortgage crash.
Kathleen Brooks, research director at XTB, says there are a few factors behind the muted reaction to what she calls “Nvidia’s A* earnings report”:
Nvidia and the semiconductor space has outperformed the broader tech sector so far this year. Nvidia’s results suggest that demand for AI is strong, and fears of an AI bubble are overdone. Thus, investors could pile into the less loved parts of tech, for example software, before going headfirst into Nvidia. The Nasdaq e-mini contract is higher by 1.4% after Nvidia’s earnings report.
Secondly, this report did not generate much reason for disappointment, but even so, some investors may have hoped that CEO Jensen Huang would boost sales pipeline estimates for this year above $500bn. Huang was also asked about hyperscalers’ and their future capex plans now that there was some pressure on their cash flows. This did not bother Huang, but it could sow a seed of doubt in the mind of investors.
Overall, the initial reaction to Nvidia’s results suggest that investors are still unwilling to chase a higher trend in tech stocks right now, even after Nvidia’s stunning earnings report. This report will likely be pored over in detail on Thursday, but for now it is not driving a significant rally in the share price.
The agenda
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8.30am GMT: Christine Lagarde testifies to the Committee on Economic and Monetary Affairs (ECON) of the European Parliament
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9.30am GMT: UK’s ONS publishes latest quarterly NEETs data
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1.30pm GMT: US weekly jobless claims
Key events
Ocado to cut 1,000 jobs in cost-cutting drive
Online grocery firm Ocado is planning to cut around 1,000 jobs as it cuts costs and uses artificial intelligence systems to become more efficient.
Ocado has announced that it expects to slash £150m of its technology spend and support costs, partly through “AI efficiencies, and associated reductions and cost discipline in Support functions”.
According to PA Media, around 1,000 jobs are being axed, or around 5% of Ocado’s global workforce, with about two thirds of the job losses impacting its UK operations.
Tim Steiner, CEO of Ocado Group, said this morning that Ocado has largely finished a “very significant” investment phase in its robotics and automation capabilities, and would now focus its R&D investment on areas with the clearest path to value creation.
Steiner added:
These changes will also reflect the lower structural cost base that we have signalled over recent years. Regrettably, this means a significant number of roles will no longer be required. We are grateful to colleagues who are affected by these changes, and whose talent and hard work have made a lasting contribution to Ocado. We will support those impacted through this process.
Richard Clode, portfolio manager at the Global Technology Leaders Team of Janus Henderson Investors, explains how the debate over Nvidia’s value has shifted in recen months:
“Nvidia’s stock has derated materially over the past six months, with the share price stagnating despite 50% positive earnings revisions.
As a result, the debate has shifted away from near-term results and toward the sustainability of AI capex spending, amid concerns around its quantum, monetisation and potential cashflow degradation. The muted reaction to Nvidia’s blowout guidance mirrored last quarter and reflects this ongoing debate.
Whether Jensen can move the conversation forward at next month’s GTC event remains to be seen, but in the interim, despite broader market concerns about an AI bubble and elevated technology valuations, Nvidia continues to derate. It now trades at a significant discount to AI peers and on a similar multiple to McDonald’s.”
EBRD warns of uncertainty swirling in trade and geopolitics
Heather Stewart
“Uncertainty continues, both on the trade front and the geopolitical front,” the chief economist of the European Bank of Reconstruction and Development (EBRD) Beata Javorcik warned with some understatement, as she launched the London-based lender’s latest forecasts (released here this morning).
The taxpayer-backed EBRD once focused on rebuilding central and Eastern Europe after the collapse of the Berlin Wall, but now extends its reach into the Balkans, Africa and even Iraq.
Javorcik said the countries in which it operates had been more resilient in the face of volatile US trade policy than expected, forecasting GDP growth of 3.6% this year, up from the 3.4% expected in September.
She said:
“Economies across the EBRD regions are proving more adaptable in the face of persistent trade tensions than many expected.
“Supply chains are evolving rather than retreating, creating new opportunities for diversification and integration into emerging industries, including those linked to AI.”
However, she suggested the full impact of tariffs may not yet have been felt, because of significant front-loading of imports ahead of their imposition last year.
The EBRD’s analysis also underlined the hefty debt burden faced by some economies – which could make them vulnerable if global credit conditions tightened.
“Government interest payments reached 89% of government revenues in Egypt in 2025 and are estimated to account for over 30% of revenues in Kenya, and over 20% in Nigeria, Ghana, Senegal and Jordan,” it said.
Traders in Tokyo should start ordering their “Nikkei 60,000” hats!
Japan’s Nikkei share index has closed at a record high, as software-related stocks surged today, shrugging off recent losses.
This pushed the Nikkei over the 59,000-point mark for the first time, hitting 59,332 points at one stage before ending the day at 58,753 points, an all-time closing high.
Yutaka Miura, senior technical analyst at Mizuho Securities, says:
“Since it was widely expected that NVIDIA would post strong results, and it did, this has prompted some profit-taking for the moment.”
Ipek Ozkardeskaya, senior analyst at Swissquote, says Nvidia announced “another spectacular set of results” last night:
The company posted $68.1bn in revenue, 73% higher than the same period last year, with 90% of that coming from its data-center division.
Net income almost doubled, and gross margin improved to 75% — all significantly better than analysts had expected.
Addressing concerns that Google’s TPUs — designed for AI inference, far more energy-efficient and cheaper than Nvidia’s — could steal business, Jensen Huang said that his company is “the king of inference today” and that the Blackwell and next-generation Vera Rubin platforms “will extend that leadership further”, adding that adoption of agentic AI is skyrocketing.
Although his words may sound over-the-top, Huang has delivered consistently on his promises over the past three years.
Introduction: Nvidia fails to wow Wall Street with blockbuster quarter
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
What’s a tech firm gotta do to get a share price bump these days?
Nvidia may be asking that question after reporting strong earnings last night, alongside a solid growth forecast, only to receive a shrug from Wall Street.
The chip-making firm certainly had another extremely strong quarter – it posted record quarterly revenue of $68.1bn for October-December 2025, up 20% compared with the third quarter of last year and a sizzling 73% more than a year earlier.
The company said sales were being driven by accelerated computing and AI, with customers scrambling to get their hands on its high-powered Blackwell chip.
Jensen Huang, founder and CEO of Nvidia, told investors that take-up of AI agents by companies was accelerating:
“Enterprise adoption of agents is skyrocketing. Our customers are racing to invest in AI compute — the factories powering the AI industrial revolution and their future growth.”
Nvidia also predicted another jump in sales in the current quarter, when revenue is expected to rise to $78.0bn, beating forecasts.
But while its shares did briefly rally in after-hours trading when the results hit the wires, this didn’t last – the stock then turned negative, and finally finished just 0.2% higher.
As Jim Reid of Deutsche Bank puts it:
The initially positive reaction faded as the company’s conference call offered limited detail on the revenue outlook, leaving the chipmaker’s shares little changed by the end of extended trading. So perhaps a sign of investors’ increased anxiety over AI valuations.
Nvidia’s problem is partly that its share are already ‘priced for perfection’ – up 1,300% over the last five years. So even stellar sales growth is already priced in.
Also, these results landed in a market where investors are fretting that AI will drive up white-collar unemployment, take business away from software-as-a-service companies, payment providers and travel and estate agencies, and trigger a mortgage crash.
Kathleen Brooks, research director at XTB, says there are a few factors behind the muted reaction to what she calls “Nvidia’s A* earnings report”:
Nvidia and the semiconductor space has outperformed the broader tech sector so far this year. Nvidia’s results suggest that demand for AI is strong, and fears of an AI bubble are overdone. Thus, investors could pile into the less loved parts of tech, for example software, before going headfirst into Nvidia. The Nasdaq e-mini contract is higher by 1.4% after Nvidia’s earnings report.
Secondly, this report did not generate much reason for disappointment, but even so, some investors may have hoped that CEO Jensen Huang would boost sales pipeline estimates for this year above $500bn. Huang was also asked about hyperscalers’ and their future capex plans now that there was some pressure on their cash flows. This did not bother Huang, but it could sow a seed of doubt in the mind of investors.
Overall, the initial reaction to Nvidia’s results suggest that investors are still unwilling to chase a higher trend in tech stocks right now, even after Nvidia’s stunning earnings report. This report will likely be pored over in detail on Thursday, but for now it is not driving a significant rally in the share price.
The agenda
-
8.30am GMT: Christine Lagarde testifies to the Committee on Economic and Monetary Affairs (ECON) of the European Parliament
-
9.30am GMT: UK’s ONS publishes latest quarterly NEETs data
-
1.30pm GMT: US weekly jobless claims