Stock markets stage cautious recovery as blockbuster Nvidia sales stifle AI bubble fears

Global stock markets are trading higher on Thursday 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.

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 opened 0.6 per cent higher after losing more than 4 per cent over the last week, with the blue-chip index led by tech-exposed investment trusts Polar Capital Technology and Scottish Mortgage.

Nvidia represents 10.9 per cent of Polar Capital’s portfolio, while the tech giant makes up 3.3 per cent of Scottish Mortgage’s holdings.

The FTSE 100, which is less exposed to the tribulation of global tech than some global rivals, followed European and Asian stocks higher.

What bubble? Nvidia says demand for its chips is still booming 

European stocks were up by 1.2 per cent in early trading, with France’s CAC and Germany’s Dax adding 1.2 and 1 per cent, respectively.

Meanwhile, Japan’s Nikkei 225 led gains in Asia, adding 2.7 per cent.

US markets are also set to open strongly later today, with futures markets pointing to growth of 1.8 and 1.2 per cent for the Nasdaq and S&P 500, respectively.

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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