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Today's big stories

Nvidia reported better-than-expected earnings, following a strong quarter for its data center segment
Even Squid Game’s eye-watering success can’t get the South Korean stock market back on track – Read Now
Alibaba’s earnings came in below expectations, as the ecommerce giant’s year goes from bad to worse

Cloud Nine

What’s Going On Here?

Nvidia reported better-than-expected quarterly earnings earlier this week, and the US chipmaker sure is in bright spirits about its remarkably cloudy-looking forecast.

What Does This Mean?

Nvidia made a name for itself by manufacturing graphics chips for gamers. That’s still the biggest part of its business today, so it’s a promising sign that the segment’s sales grew 42% last quarter compared to the same time last year. But it was Nvidia’s data center business – which sells cloud computing chips – that really impressed investors: its sales grew by a better-than-expected 55% last quarter. That helped boost the company’s revenue by 50% to a record high of $7 billion. Nvidia seems optimistic about the future too, giving a higher-than-expected revenue forecast for this quarter. Investors didn’t need telling twice: they sent its shares up 10%.

Why Should I Care?

For markets: Nvidia’s found its niche.
Nvidia’s share price has more than doubled this year, bringing its market value to around $800 billion. That’s over three times as much as that of rival chipmaker Intel, even though Intel’s yearly revenue is three times higher than Nvidia’s. Investors, after all, value growth above all things, and Nvidia has that locked down: its chips are far better suited than Intel’s to artificial intelligence, which is one of the fastest-growing areas of the cloud industry. That might be why Nvidia’s quarterly revenue has grown by 56% on average over the last two years, versus Intel’s measly 4%.

Zooming out: Life isn’t fair.
Sweet results or no, Nvidia’s probably a little bitter right now: the firm’s been trying to acquire British chip designer ARM for over a year, but Europe opened a potentially deal-scuppering investigation into the transaction last month. And it wasn’t done there, saying this week that it’s also looking to subsidize European chipmakers in a bid to ease the supply crisis – a move that would give them an unfair advantage over non-European chipmakers like Nvidia.

You might also like: How to profit from the world of fast-growing cloud computing.

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Analyst Take

Even Squid Game Can’t Save South Korean Stocks

Carl Hazeley, Analyst

What’s Going On Here?

South Korean stocks have had a lot of fanfare in the last 18 months.

The huge success of Squid Game switched a lot of investors onto the market, as did a perfect storm of low interest rates, countrywide stimulus checks, and low valuations.

Between the start of 2020 and the end of June 2021, in fact, the South Korean stock market outperformed almost every other one out there.

But that’s all changed in the months since. And now, there’s the risk of a major crash as professional investors sell the country’s stocks and retail investors just keep buying.

So that’s today’s Insight: where it all went wrong for South Korean stocks, and what you can do right now to avoid serious losses.

Read or listen to the Insight here

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