LEILA FADEL, HOST:
Tech company Nvidia keeps producing eye-popping earnings results.
A MARTÍNEZ, HOST:
Yeah. Listen to these numbers. The company announced late yesterday that it made $32 billion in the last three months. In recent weeks, it hit a $5 trillion valuation. Nvidia is a company fueling much of Wall Street's optimism about AI.
FADEL: NPR's finance correspondent, Maria Aspan, is here to talk about investors' exuberance and caution about the AI boom. Good morning, Maria.
MARIA ASPAN, BYLINE: Good morning.
FADEL: Nvidia has been valued at $5 trillion. That's a lot. How and why is it generating so much enthusiasm?
ASPAN: It is, in fact, the most valuable company in the world, and it's also one of the most closely watched. As an example, Bloomberg, the financial news site, yesterday actually liveblogged the entire Nvidia conference call with investors like it was the Oscars or the Super Bowl. And Nvidia is this closely watched because it sells the computer chips that are powering the AI boom. And as it told investors again yesterday, it is making gobs of money from that. Yesterday's earnings report showed that revenue and profit beat analyst expectations, and the market is thrilled. Nvidia shares are up about 5% right now, and stock futures overall are up. Nvidia CEO Jensen Huang told investors in a call yesterday that he's confident in Nvidia's future.
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JENSEN HUANG: There's been a lot of talk about an AI bubble. From our vantage point, we see something very different.
ASPAN: So he's basically saying that the world is only at the beginning of the transition to generative AI and that there is so much more to come.
FADEL: Nvidia's CEO dismissed the notion there that there's an AI bubble, but there seems to be a very real fear among investors. Is that right?
ASPAN: Yeah. That has been a recurring fear, and we did see it come up again in recent days. The benchmark S&P 500 index in particular is coming off its worst losing streak since August. And that's because tech, and AI in particular, is such a huge part of the stock market. By one estimate, AI-related stocks make up nearly half of the value of the S&P 500. But while Wall Street is pinning all of its hopes on the AI boom, it's a long-term bet, and the companies that are investing in AI are just not seeing huge, tangible results yet.
So this latest Nvidia earnings report came out at a time when we're seeing mounting warnings that tech stocks are too hot and the market is due for a correction. We're hearing that from top investment banks like Goldman Sachs and Morgan Stanley, and even from Silicon Valley leaders that are involved in the AI boom, like Sundar Pichai. He's the CEO of Google parent company Alphabet, which we should note is a financial supporter of NPR. And this week, in an interview with the BBC, Pichai was surprisingly candid about whether this is a bubble.
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SUNDAR PICHAI: I think it's both rational and there are elements of irrationality through a moment like this.
ASPAN: Elements of irrationality is a pretty big acknowledgment coming from Google. And Pichai also acknowledged that sometimes the tech industry overshoots in investment cycles.
FADEL: All right, Maria. So what does this mean for all us non-tech-titans out here?
ASPAN: Well, it's important to remember that the stock market is not the economy, but it is often seen as an indicator of how the economy is doing. And the problem is that a lot of the AI boom that's making the market hit record highs is letting investors gloss over questions about what is going on in the economy. Tariffs are cutting into company profits, consumer prices are going up and the job market has been weakening. So while AI has been a big bright spot, it's unclear how long it can last.
FADEL: That was NPR's Maria Aspan. Thank you, Maria.
ASPAN: Thank you. Transcript provided by NPR, Copyright NPR.
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