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‘Magic Jensen’ might be a joke that goes over the heads of anybody who isn’t into basketball (look up Magic Johnson) but the effect is the same: at the helm of NVIDIA, Huang has basically saved market sentiment down under as the multi-trillion-dollar tech giant posts an earnings beat, which has been enough – somehow – to push ASX smallcaps broadly into the green on Thursday.
(So I’m calling that a ‘slam dunk.’ The joke works, I promise.)
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This all ignores the fact that the swings and roundabouts of US-based NVIDIAs earnings basically means F all for the Australian market, let alone our economy, but don’t let that spoil a good party. The ASX200 was up 1.3% heading into the final hour of trades and almost every sector was in the green.
As for sectors, it’s no surprise IT was in the lead. That’s reprieve for anybody exposed to Australian tech ETFs, our relatively miniature tech sector has been suffering enough lately with the malaise borne from Richard White’s antics at Wisetech Global; that’s on top of a boil-up of concerns in recent weeks around whether or not we’re in an AI bubble.
That question will emerge again, you can bet your top dollar on it – but it would be exactly that, betting, because the famous maxim goes ‘the market can stay irrational longer than you can stay solvent.’
It’s true that the Wall Street-listed AI sector has turned into the same handful of companies pushing multi-billion dollar sums around a board, and this wouldn’t be the first time, by any means, concerns about a bubble have been raised. We’ve seen quite a few shocks to sentiment in the last two years, but NVIDIA keeps beating estimates, and other tech companies meep making big eight figure announcements, and so sentiment stays positive.
Worth noting, which I discussed with HotCopper Digital Editor Isaac McIntyre on today’s episode of the HotCopper Wire podcast, this year, analysts aren’t calling NVIDIA’s results “insane” like they were in 2023.
Slowly, the market is getting used to the excitement, or hype if you prefer, and we’re truly seeing NVIDIA’s share price reflect assumptions of future earnings. That’s why it’s a good thing the company says it will earn USD$66B in the next three months. (We’ve been hearing more about that than statements around ‘half a trillion’ that came from Huang in response to eager questions ahead of the earnings release.)
At any rate, it’s a pretty good bet that we’ll see a green Friday on the ASX, unless this ongoing threat-of-trade-war situation between China and Japan continues to unravel in a bad way between now and then. But it’s probable that investors will ignore anything negative as fiercely as they can after what has been a resolutely shit few weeks for the local market, all things considered.
And that’s a good thing – don’t worry, I haven’t forgot where my writing is published. Who knows where we go from here, but for now, good news is good news, and the market’s back, baby.
Unless you’re invested in Droneshield, of course.
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