Nvidia confirms AI momentum
Equity markets navigated a volatile week in which geopolitical risk, bond yields and AI earnings all played an important role. Early in the week, sentiment came under pressure due to renewed concerns around the US-Iran conflict and the Strait of Hormuz.
Higher oil prices fuelled inflation worries and pushed bond yields higher. This weighed particularly on growth equities, as higher long-term interest rates again reminded investors that highly valued parts of the market remain sensitive to changes in the interest-rate outlook.
However, the macro backdrop was not one-directional. By mid-week, sentiment improved meaningfully as hopes increased that the US and Iran were moving closer to a potential agreement. This helped equities recover and pushed oil prices lower, reversing some of the earlier outperformance in energy stocks. For investors, this underlined how quickly market leadership can shift when geopolitical headlines move from escalation risk to potential de-escalation.
The key company-specific event of the week was Nvidia’s earnings. The results were strong and supportive for the broader AI theme. Nvidia delivered a clear beat-and-raise quarter, with revenue, earnings and guidance ahead of expectations. The company’s commentary also reinforced confidence in its product roadmap. Importantly, Vera, Nvidia’s new CPU, and Rubin, its next-generation GPU architecture, should be viewed as distinct but complementary parts of the company’s future AI platform. This supports the view that Nvidia’s opportunity is broadening beyond GPUs alone.
The muted share-price reaction despite strong results was therefore more a reflection of high expectations than weak fundamentals. Investor positioning in AI and semiconductors is already elevated, meaning even very good numbers may not always lead to a strong immediate market reaction. Still, the broader message from the results was positive: AI infrastructure demand remains robust and continues to benefit data centres, networking, CPUs, memory and power-related infrastructure.
In Europe, equities also faced pressure from higher yields and energy-related inflation concerns, although markets recovered some ground as bond yields eased later in the week. Overall, the week highlighted a familiar tension for investors: AI-driven earnings momentum remains strong, but geopolitics, rates and crowded positioning continue to argue for selectivity and caution.