🍬 Nvidia sweet treat: A baker’s dozen of beats

The world’s most valuable company posted better-than-expected Q4 results and very strong sales guidance for the current quarter.

• Nvidia posted $68.13 billion in revenue (of which $62.31 billion came from data centers) and gave guidance for $78 billion in revenue for this quarter, which blasts past expectations of $72.8 billion. 

• Nvidia itself rose on the news, as were the other boats riding the tide: data center stocks Applied Digital, IREN, CoreWeave, and Nebius, as well as foundry giant TSMC and optical communications firm Corning, caught a bid in after-hours trading thanks to the strong results and guidance from Nvidia.

• The chip designer’s massive outlook for Q1 sales — with the midpoint at $78 billion, versus a consensus estimate of $72.8 billion — underscores the magnitude of the near-term demand for AI compute and chips. As if the hyperscalers’ massive capex budgets hadn’t already done that!

In November, the knee-jerk boost in Nvidia following solid Q3 earnings and Q4 guidance didn’t last long, with shares ending well in the red the next session.

The Takeaway

Near-term demand for Nvidia’s chips isn’t really in question, thanks to the gargantuan capex budgets unveiled by hyperscalers this reporting period. Wall Street will be looking to see if the chip designer can maintain high profitability as it delivers racks, particularly with memory chip prices elevated and its next-gen Vera Rubin offering coming to market.

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The vast majority of S&P 500 companies are talking about AI this earnings season, at least in broad strokes.

But precious few are disclosing hard numbers on how AI makes them more profitable, according to a review of Q4 earnings calls conducted by Goldman Sachs analysts.

• In a note published late Tuesday, analysts with the bank found that just 1% of the members of the S&P 500 have “quantified the impact of AI on earnings.” 

• That’s despite 70% of the blue-chip index’s members “broadly discussing AI” on earnings calls.

• Only two new companies quantified an AI productivity impact on their current earnings, Goldman found. One was financial analytics and ratings powerhouse S&P Global. The other was water treatment and commercial cleaning products manufacturer Ecolab.

“In earnings calls, many companies have grouped AI with broader automation and productivity initiatives, making it difficult to disentangle the impact of AI specifically,” the analysts wrote. “10% of S&P 500 companies quantified the productivity boost from an AI on a specific use case during their 4Q earnings calls, particularly among developers. Our economists recently highlighted softness in tech employment in recent months.”

The Takeaway

The gap between the share of executives yapping about AI and the dearth of detail on the technology’s bottom-line impact may be part of the reason investors have gotten slightly jittery about AI during the recent flurry of earnings reports, with volatility in baskets of AI-related stocks picking up over the last month.

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Anthropic faces a difficult decision after a tense meeting between CEO Dario Amodei and Defense Secretary Pete Hegseth at the Pentagon threatened to unravel years of the company’s work with the government.

The timeline

• 🚀 Aliens: A prediction market regarding a hypothetical confirmation of the existence of aliens from the United States government has seen a surge in activity lately amid candid discussions about the possibility of extraterrestrial life from former President Barack Obama. As it stands, markets* price in a 23% chance of some form of confirmation before 2027. 

• 🎬 Best Actor: This Sunday’s Actor Awards presented by the Screen Actors Guild will be one of the last, best insights into what’s become a highly competitive and unpredictable Oscars race. It’ll offer decisive insight into Best Actor, that much is for sure: right now Timothée Chalamet is priced at having the best shot at the Oscar, at 71%, but Leonardo DiCaprio (11%) and Michael B. Jordan (10%) still have time to surprise. 

*Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.

• Earnings expected from CoreWeave, Warner Bros. Discovery, Baidu, Duolingo, Vistra, SoundHound AI, Rocket Lab, D-Wave Quantum, Intuit, Dell, Celsius, and Autodesk