This may seem like an odd market reaction to results that beat consensus expectations for revenue, sales outlook and earnings.And that was accompanied by an additional $50 billion in share buybacks, but it appears some analysts weren’t expecting the law of large numbers to kick in quite yet. Nvidia reported revenue growth of over 200% for the previous three quarters, and that pace couldn’t continue forever.

“The magnitude of the beat this time was much smaller than we’ve seen,” said Ryan Detrick, chief market strategist at Carson Group, as quoted by Reuters. “Even forward guidance was raised, but again not in the same way as in previous quarters. This is a great company that’s still growing revenue at 122%, but it seems like the bar was set a little too high this earnings season.”

Ipek Ozkardeskaya of Swissquote Bank also said Nvidia’s “shining results were clouded” by the confirmation of a reported design flaw in Blackwell, the next generation of Nvidia’s top-end AI chips. Reports earlier this month said the flaw meant Blackwell would be delayed by three months or more, which could have affected customers’ plans to run large clusters of the Things in the first quarter of next year.

But ultimately, the necessary design change was more about increasing production yields than tweaking Blackwell’s architecture. It’s now been resolved, and Nvidia CFO Collette Kress said “several billion dollars in Blackwell” was on track to ship in Q4. Nvidia also still expects shipments of its current-generation Hopper to continue to grow.

In short, there are no major concerns about Nvidia, other than the fact that there is a natural limit to the growth of any company. “The competition is nowhere near (taking) market share from Nvidia and so the investment case still looks solid,” said Peter Garnry, Chief Investment Strategist at Saxo Bank.

And if Nvidia’s case is solid, does that mean the same for the broader AI sector, where Nvidia is often seen as a trailblazer? Perhaps. Big Tech’s AI spending is clearly continuing apace, but there are reasons for concern.

The Metas and Microsofts of the world still have to prove that all their AI investments are truly paying off. For that to happen, their customers will have to demonstrate sustained enthusiasm and willingness to pay for the benefits of generative AI. The jury is still out.

It’s also, as always, worth keeping an eye on regulatory developments that could impact AI. Meta and Apple both refuse to release their AIs in Europe, citing different legal reasons. The California State Assembly also passed a major AI safety bill yesterday. Supporters say it’s a gentle first step in AI regulation, but opponents have warned it could stifle innovation. If the bill gets Governor Gavin Newsom’s signature, and the latter camp is right, it could lead to some kind of reduction in demand for Nvidia’s wares. Maybe.

Despite all the fevered anticipation leading up to Nvidia’s results yesterday – traders expected to see a record 11% surge in stock prices – not much has really changed. But, markets being the sentimental beasts that they are, the realization that “up numbers” can’t last forever has hit not just Nvidia but other chip companies like SK Hynix and Samsung Electronics, whose shares fell 5.4% and 3.1% respectively in South Korea today.

More news below.

David Meyer

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NEWSWORTHY

Durov last. Telegram CEO Pavel Durov was formally investigated yesterday on multiple potential charges relating to criminality on the social network/messaging app. He has posted $5.5 million in bail and is not allowed to leave France. AFP reports that Russia continues to claim the case is politically motivated. There is no evidence of this, and claims that Durov is a martyr to free speech remain equally dubious. But one thing is for sure: holding a tech CEO for the things that happen on their platform is a game changer. PS: Forbes reports that Durov is also a suspect in a Swiss case brought by a former partner, who claims he was physically abusive to one of their children.

Yelp is suing Google. Business review site Yelp has finally sued Google in the US, after years of lobbying the Big Tech company over anti-competitive allegations. Unlike the seismic ruling earlier this month, which found Google to have an illegal monopoly on web search and search text advertising, this case concerns Google’s position in local search. As The Verge explains, Yelp alleges that Google is steering search users toward its own local search verticals in order to stifle rivals in that space (like Yelp).

X suspension is imminent. Elon Musk’s ex has been ordered to appoint a legal representative in Brazil by tonight or risk suspension in the country. New York Times reports. The order came from Brazilian Supreme Court Justice Alexandre de Moraes, who has recently become Musk’s arch-nemesis. Musk shuttered his Brazilian operations earlier this month in protest of Moraes’ insistence that he block certain far-right accounts. But X had planned to continue serving the lucrative market, which could now become impossible if it doesn’t relent.

KEY FIGURES

More than 100 billion dollars

-The valuation at which OpenAI is negotiating a new round of fundingaccording to the Wall Street Journalwho says Thrive Capital will lead the round with a new investment of about $1 billion. OpenAI’s last valuation, late last year, was $86 billion.

IN CASE YOU MISSED IT

Nearly half of Nvidia’s revenue comes from just four mysterious whales that buy more than $3 billion each, by Christiaan Hetzner

Why Telegram CEO Pavel Durov Stands Out from Other Tech Executives, by Paolo Confino

CrowdStrike CEO celebrates ‘resilient’ earnings after causing global outage that some feared would kill his business, by Jenn Brice

Tesla removes Elon Musk’s original manifesto from its website, by Sascha Rogelberg

TikTok sued by British content moderator over toxic work culture, allegations of discrimination and ‘impossible goals’, by Bloomberg

Warren Buffett Gets Early Birthday Present as Berkshire Hathaway Joins $1 Trillion Club, by Greg McKenna

BEFORE YOU GO

Optimism about Apple’s AI iPhone. Apple has ordered more components for its upcoming AI-powered iPhone than it did for the iPhone 15 last year, Nikkei Asia reports. The publication reports that suppliers are seeing orders up 10% or more from 2023 levels, though Apple often orders high at first before moderating its order once it sees how the model is selling.

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