Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Nvidia is expected to say on Wednesday that its quarterly sales have more than doubled, even as year-on-year growth slows, as Wall Street braces for what has become one of the world’s most closely watched earnings reports. Analysts predict the US chipmaker will report $28.7bn in revenue for the quarter, which would represent an increase of more than 100 per cent from the year before. Still, that would represent a significant slowdown from the previous quarter, when revenue growth reached a blistering 262 per cent, fuelled by an insatiable demand for its chips that power a wave of AI innovation. Investors will be watching in particular for how much a delay to its next-generation Blackwell chips could hinder its phenomenal growth story. Nvidia has fast become a bellwether for investors watching for signs that a months-long AI spending boom may slow. That has created the potential for market volatility around the announcement from a stock that has driven more than a quarter of the year-to-date gains in the S&P 500.There are signs some investors are already readying themselves for broader reverberations from Wednesday’s release. Options markets were last week pricing in a 1.3 per cent swing in the S&P 500 for the first day of trading after Nvidia published its results, according to data from Citi — the same expected volatility as next month’s Federal Reserve meeting. Options were pricing in a swing of up to 10 per cent in either direction for Nvidia’s stock.Nvidia’s shares have climbed more than 160 per cent this year, but its performance has been more volatile in recent weeks as investors have reassessed some of their bets on AI-linked stocks. IT and consumer discretionary stocks — which include tech giants Amazon and Tesla — have been two of the worst-performing sectors in the S&P 500 in the third quarter. At its lowest point during a recent market sell-off, Nvidia was 35 per cent below its all-time high. By last Friday it had regained the bulk of the losses but was still 8 per cent below its record.“I think there’s been a genuine shift and sobering up” on some of the more extreme AI bets, said Dec Mullarkey, managing director at SLC Management. “If they disappoint in some way, that could lead to a fairly significant correction and spillover.”Despite these concerns, there has been little sign that the AI spending spree by the likes of Google, Microsoft, Meta and Amazon is abating. Accordingly, many analysts are anticipating yet another strong quarter for Nvidia.But there are some potential hurdles. The rollout of Nvidia’s next generation of GPUs, known as Blackwell, has been delayed by manufacturing complications with its partner TSMC. Nvidia chief executive Jensen Huang said on the company’s previous earnings call in May that he expected Blackwell to contribute “a lot” of revenue this year.Citi analysts said last week investors would be focused on demand for Nvidia’s current generation of Hopper chips, which could offset any impact from delays to Blackwell.HSBC analysts said they do not foresee “any material downside” risk to the company’s earnings in 2025 and 2026 as a result of the delay to the Blackwell chip. They were also bullish on the upcoming results, saying they expected revenue to once again beat expectations and hit $30bn. Earnings from Big Tech companies engaged in the race for AI dominance have given a glimpse at the spending spree of which Nvidia has been a beneficiary. In its quarterly results in July, Google reported another increase in its capital expenditure, rising to $13bn for the quarter to the end of June, reflecting in part its ongoing spending on Nvidia’s chips. Meta, Microsoft and Amazon similarly reported that they plan to continue heavy spending on AI.The continued emphasis on spending with little guidance on when it would translate into earnings and productivity growth spooked some investors who were already concerned that valuations among large tech groups had become stretched. Spending by a small group of Big Tech AI “hyperscalers” make up close to half of Nvidia’s data centre business revenue, which has fast become the company’s main earner.“The big concern everyone is going to have is the Blackwell delay,” G Dan Hutcheson at TechInsights told the Financial Times. “The other factor is when people begin to look at the world and say: ‘are [the hyperscalers] able to monetise this?’ Because at some point they have to rationalise what they are doing.”“My sense is that Nvidia investors are going to stay the course, especially with the economy doing well and expectations of a drop in business rates at macro level,” Hutcheson added.Video: AI: a blessing or curse for humanity? | FT Tech
