By Björn Jeffery, SvD Tech Brief. Published in Svenska Dagbladet on 27 February 2025.
Nvidia’s strong results show that AI investment continues to grow. But the pressure mounts with each quarter, while concern over China’s DeepSeek lingers. And the key question remains.
This was probably not how Jensen Huang, Nvidia’s CEO, had envisioned his career.
In 1993 he founded a company called Nvision together with a few friends. They were going to make graphics chips for computers. The name had to be changed quickly, however, when it turned out to belong to a manufacturer of toilet paper. The new name — Nvidia — was borrowed from the Latin word “invidia,” meaning envy.
An enviable situation is, however, not exactly what either Nvidia or Huang finds itself in right now.
After spending some 20 years in relative obscurity on the stock market, interest in the company has now exploded. When Nvidia reported its quarterly results late on Wednesday evening, Swedish time, the world’s stock markets sat on tenterhooks with a single question in mind: do we have an AI bubble? And it was Huang’s job to give them the answer.
For virtually any other company, the numbers would have been compelling. Nvidia grew its revenues by 78 percent compared with the previous year, and beat market expectations on both revenue and profit. Over the full year, revenues grew by an astonishing 114 percent — a barely comprehensible achievement at these levels.
For Nvidia, however, that apparently was only to be expected. The stock market reacted with a yawn. The share price in after-hours trading barely moved.
The results were strong — but not strong enough to make markets forget the anxiety that has characterised the AI market for a couple of months now. Nvidia’s explosive share price growth has stabilised — admittedly at a very high level, but stabilised nonetheless. When we are talking about the world’s second-most highly valued company by market capitalisation, every such signal carries weight.
One source of that concern is spelled DeepSeek — the Chinese AI model that has taken the world by storm in recent months. The interest in DeepSeek has not been because it is better than other AI models, but because of how surprisingly capable it is given the limited resources used to create it. China faces trade restrictions on what type of chips it is permitted to buy. To work around them, it has had to develop differently.
This potential technical innovation could be seen as a positive development for AI, since it demands fewer resources. If you are Nvidia — essentially the only seller of those resources — it could instead become a problem.
“DeepSeek made us understand that Nvidia is not invincible,” said Shana Sissel, chief investment officer at fund Banrion Capital, to Bloomberg.
The quote says it all. No company is really invincible — but looking at Nvidia’s share price since January 2023, one might be forgiven for thinking otherwise. The increase is around 560 percent. The market capitalisation stands at over 32,000 billion kronor — roughly three times the entire Stockholm Stock Exchange combined.
Another potential concern is the trade barriers and tariffs that may be introduced in the United States. It is already forbidden for Nvidia to sell its best chips to China. But the company has developed an entire product line sitting right at the edge of what is permitted — and sells a great deal of it. China is a very important market for Nvidia, and if further tariffs or restrictions are imposed the impact could be severe. The US is also investigating whether China has managed to circumvent the ban in some way — for example by using data centres in Singapore, another of Nvidia’s major markets.
Nvidia’s quarterly results make clear that these clouds of concern have not significantly dampened AI investment appetite — not yet, at any rate. Even Nvidia’s forecasts for the coming quarter came in higher than analysts had expected.
In practice this means that tech companies continue to place large orders for Nvidia’s chips and services. And even if markets have wondered whether new, cheaper ways of building AI services might exist, nobody seems quite ready to cut back on investment pace just yet.
The world’s stock markets breathed a collective sigh of relief. Nvidia and Jensen Huang delivered yet another strong quarter. But the pressure is unlikely to ease. In three months’ time, the market will ask the same question it is asking now: can Nvidia really do it again?
