Nvidia's 'Wow' Factor Is Fading - Heard on the Street — WSJ

Dow Jones Newswires

By Asa Fitch

Nvidia shocked the world two years ago in May when it posted earnings that included a forecast of $11 billion of quarterly revenue, some 53% more than analysts were predicting.

A string of surging sales and profits soon followed. But such barnburner quarters aren't likely happening again any time soon.

Nvidia's latest quarter put the deceleration on display. While sales came in above analysts' expectations, it was the narrowest beat in the nine quarters since the artificial-intelligence boom propelled the company to unprecedented heights. Its shares have fallen about 6% since the results.

One reason for Nvidia's slower growth is obvious: The law of large numbers dictates that the bigger you get, the more difficult it is to keep getting bigger at the same breakneck pace.

But there is another, more structural reason Nvidia's growth looks less exponential: supply-chain constraints that no amount of financial success can cure.

Nvidia's AI chips are almost all produced by Taiwan Semiconductor Manufacturing Co., then are packaged up into elaborate configurations that are inserted into increasingly elaborate computing systems. Those systems then go into the data centers where AI number-crunching takes place.

Nvidia has made significant strides over the past two years in both producing more chips and getting them into the systems its customers crave. But it is a complex dance: There are about 600,000 components in each of the company's biggest AI computing systems, Chief Executive Jensen Huang said in March, and some of its future systems are set to have 2.5 million parts.

At a company conference in June, Huang said supplies for Nvidia's current systems weren't "horribly difficult to get" as long as the company could forecast to suppliers what it needed. But there were challenges. "It's constrained, but we're still growing fairly fast," he said, adding that it currently takes about a year between when an Nvidia chip starts being made and when an AI supercomputer ships to a customer.

There are other signs that Nvidia is on a more measured trajectory. In Nvidia's latest quarter, UBS analysts said their metric of "supply" — the sum of inventory items and supply commitments that attempts to gauge future revenue trends — rose to about $45 billion from about $41 billion in the previous quarter. Juxtaposing those figures with Nvidia's revenue guidance, this analysis "tells us that supply looks sufficient for revenue to continue growing ratably, but does not foreshadow a big 'hockey stick' in revenue," the analysts said.

Already, Nvidia's 56% annual revenue growth rate in its latest quarter was its slowest in more than two years. If analyst projections hold, growth will slow further in the current quarter.

Huang thinks that many of the supply-chain issues will be worked out soon — part of the reason he has confidence that the build-out of AI data centers will become a $3 trillion to $4 trillion endeavor by the end of the decade. Nvidia's next-generation Rubin chips, which are expected to be widely available early next year, will coincide with a far more mature and scaled up supply chain, Huang said on a call with analysts last month.

It is possible that Huang is correct and that supply-chain fixes could propel Nvidia even further. But it's also reasonable to suppose that some constraints will persist — any number of which could hold the company back. Hangups in chip production have already had an impact, including limiting availability of an advanced manufacturing technique from TSMC for knitting chips together that is essential in producing Nvidia's AI hardware.

Even if Nvidia does work supply-chain magic, though, there is another structural problem coming up that it has less control over: The world's electricity grids aren't growing fast enough to handle AI computing demand.

The energy problem hasn't slowed AI's march much yet, but it's easy to see a collision coming. U.S. utilities are reluctant to develop energy infrastructure for big AI projects because they aren't convinced the AI boom will last long enough for them to recoup huge investments that could add to costs for other customers.

Expanding energy generation and transmission lines also takes years to do — a pace that's far slower than AI-demand growth.

Huang has fended off the power challenge by pointing to how Nvidia's newest chips have become far more energy-efficient — thus putting less strain on electrical grids. While the efficiency gains may be real, they don't necessarily mean customers will use less electricity. Like adding lanes to a roadway, greater efficiency invites greater usage.

Nvidia is still delighting customers with its chips and making boatloads of money. But given its supply and infrastructure constraints — as well as recent signs that AI progress is slowing — there is a good chance its future earnings surprises will be a little less delightful for investors.

Write to Asa Fitch at asa.fitch@wsj.com

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Taipei Closing Stock Prices

Dow Jones Newswires

Prices in NT$ 
 
                                 Close      Prior     Change   % Change 
  Acer                           31.35      31.90      -0.55      -1.72 
  ASE Technology Holding        167.00     171.50      -4.50      -2.62 
  Asia Cement                    36.30      36.30       unch       unch 
  ASUSTeK Computer              661.00     645.00     +16.00      +2.48 
  Cathay Financial Hldg          64.10      63.80      +0.30      +0.47 
  Cathay Rl Est Dev              21.90      21.85      +0.05      +0.23 
  China Airlines                 21.80      21.75      +0.05      +0.23 
  China Steel                    19.50      19.55      -0.05      -0.26 
  D-Link                         17.50      17.55      -0.05      -0.28 
  Evergreen Marine Taiwan       184.50     186.50      -2.00      -1.07 
  Far Eastern New Century        27.95      27.60      +0.35      +1.27 
  Formosa Plastics               38.15      38.15       unch       unch 
  Hua Nan Fin Hldgs              29.35      29.10      +0.25      +0.86 
  Nan Ya Plastics                38.65      38.40      +0.25      +0.65 
  Quanta Computer               262.50     260.00      +2.50      +0.96 
  Taiwan Semicon Mfg          1,200.00   1,180.00     +20.00      +1.69 
  Tatung Co                      39.35      38.65      +0.70      +1.81 
  TCC Group Holdings             22.40      22.30      +0.10      +0.45 
  TECO Electric & Machinery      79.60      72.40      +7.20      +9.94 
  Uni-President Ents             79.40      78.90      +0.50      +0.63 
  United Microelectronics        41.45      41.60      -0.15      -0.36 
  Walsin Lihwa                   22.15      22.25      -0.10      -0.45 
Source: FactSet

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ASML takes $1.5 bln stake in Mistral AI, becomes top shareholder

Investing.com

Investing.com-- ASML Holding NV (AS:ASML) said on Tuesday it had entered an agreement with Mistral AI under which the Dutch chipmaking equipment giant invested 1.3 billion euros ($1.5 billion) to become the top shareholder in the French AI startup.

ASML also entered a strategic partnership with Mistral under which the former will explore the use of AI models across its product portfolio and in research and development operations.

ASML will invest 1.3 billion euros in Mistral as part of the start-up’s series C funding round, taking an approximately 11% stake in the firm. Reuters had reported the stake on Monday, with the fundraising round– at $2 billion– set to make Mistral the most valuable company in Europe with a $10 billion euro valuation ($11.7 billion).

ASML will also receive a seat on Mistral’s strategic committee, gaining an advisory role in the AI startup. ASML CFO Roger Dassen will take the role in addition to his current duties, the chip equipment maker said.

ASML makes advanced lithography equipment that is crucial towards chipmaking, and is a key supplier to majors such as TSMC (NYSE:TSM) and Intel Corporation (NASDAQ:INTC). ASML, along with TSMC, has benefited greatly from rapidly increasing chip demand tied to the artificial intelligence industry.

Its partnership with Mistral ties up two of Europe’s technology leaders. Mistral is considered as Europe’s answer to U.S. AI giants such as OpenAI and Alphabet Inc’s (NASDAQ:GOOGL) Google.

Top AI chip maker NVIDIA Corporation (NASDAQ:NVDA) is also an investor in Mistral. The company was valued at about $6 billion during its series B funding round in 2024.

Mistral was founded by former Google DeepMind researcher Arthur Mensch and ex-Meta researchers Timothee Lacroix and Guillaume Lample in 2023.

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Asian markets open: Nikkei hits a record high; Sensex poised to join the gains

Invezz

A powerful and unified wave of optimism is sweeping the globe, with Asian equities surging for a fourth consecutive day as the afterglow of a dovish Federal Reserve and the promise of imminent rate cuts continue to fuel a relentless rally.

This bullish sentiment is so potent that it is completely overshadowing a series of brewing political crises, from a government collapse in France to a leadership vacuum in Japan.

The buying has been broad and powerful. MSCI’s Asia-Pacific equities gauge has surged to its highest level since February 2021, a clear sign of deep and widespread conviction.

The rally is being led by the region’s technology titans, with giants like Taiwan Semiconductor Manufacturing Co. and Alibaba Group Holding Ltd. making the largest contributions to the gains.

A symphony of records and reversals

The bullish mood has been particularly explosive in Japan, where the aftershocks of Prime Minister Shigeru Ishiba’s resignation are still being felt.

The Nikkei 225 advanced to touch a new intraday record high, as the weaker yen continues to provide a powerful tailwind for the nation’s exporters.

In the bond market, a sense of calm has returned, with government bonds firming after a brutal slump on Monday.

This powerful Asian session is a direct extension of the action on Wall Street, where the S&P 500 rebounded on Monday. The catalyst remains the market’s unwavering belief that the Fed is on the verge of a major policy pivot.

Even as upcoming inflation data is expected to show a lack of progress, traders are now pricing in almost three rate cuts this year, starting with a near-certain move this month.

“For the next several days, markets in Asia are likely to take their cue from the US, with few regional catalysts in sight,” said Frederic Neumann, HSBC’s chief Asia economist.

Political storms on the horizon

But this powerful rally is taking place against a backdrop of significant and growing political instability. In France, Prime Minister Francois Bayrou has lost a confidence motion in parliament, forcing a third change of government in just over a year.

And in Indonesia, President Prabowo Subianto has abruptly replaced his highly respected finance minister, a move that risks renewed financial turmoil in Southeast Asia’s biggest economy following weeks of violent protests.

The rupiah slid on the news, and the central bank has already pledged to intervene to maintain stability.

This potent mix of market euphoria and political chaos sets the stage for a dramatic and uncertain few weeks.

The market’s conviction will be put to the ultimate test by a volley of crucial U.S. inflation and jobs data, which will provide the final verdict on the Fed’s path.

As Megan Horneman at Verdence Capital Advisors noted, the biggest question is no longer if the Fed will cut, but how many more will follow.

“After this week’s inflation data, we will get a better picture on what the Fed can do with rates,” Horneman said.

However, we are not out of the woods with inflation, and the Fed may deliver a ‘hawkish cut.’

A bullish start on Dalal Street

For now, the optimism is winning. The Indian market is poised to join the global rally, with the GIFT Nifty signaling a positive start for the Sensex and Nifty.

At 7:30 am, the index was quoting at 24,937.5, a gain of 0.15 percent, as Dalal Street looks to ride the powerful wave of rate-cut fever sweeping the globe.

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What Are the 10 Top Artificial Intelligence (AI) Stocks to Buy Right Now?

Motley Fool

Key Points

Artificial intelligence (AI) investing remains a primary driver in the market, fueled by massive capital expenditures in data centers by AI hyperscalers. There are numerous AI stocks that investors can consider right now, and this list can serve as a starting point for further research on which AI stocks appear to be great buys.

I've got 10 on my short list for top AI stocks to buy now, but there are likely many more beyond this.

1. Nvidia

Nvidia (NASDAQ: NVDA) has been a leader in AI investing since its inception, primarily due to its industry-leading graphics processing units (GPUs), which have been widely utilized to train and run AI models. The company projects monster growth for its GPUs over the next five years, as it expects data center capital expenditures to rise from $600 billion this year to $3 trillion to $4 trillion by 2030.

We'll see if this projection pans out, but there's still massive computing demand for AI, and Nvidia is the top provider in this segment.

2. Broadcom

Another company heavily involved in this sector is Broadcom (NASDAQ: AVGO). Broadcom has two major products being used in AI data centers: its connectivity switches and its custom AI accelerators. The biggest growth story for Broadcom is these custom AI accelerators, which are alternatives to Nvidia's GPUs that are designed in conjunction with the end user.

This could be a huge market for Broadcom, and makes me bullish on the stock.

3. Taiwan Semiconductor

Neither Nvidia nor Broadcom can produce chips themselves, so they outsource the fabrication work of their designs to Taiwan Semiconductor (NYSE: TSM). TSMC is the world's largest chip foundry and has established a reputation for continuous innovation and delivering best-in-class product yields.

It's slated to capitalize on the massive AI arms race spending, regardless of which companies are using computing devices, making it an excellent AI investment on the chip side of AI.

4. ASML

ASML (NASDAQ: ASML) is a key equipment supplier to chip foundries, such as Taiwan Semiconductor, as it holds a technological monopoly with its primary product: the extreme ultraviolet (EUV) lithography machine. This allows chip manufacturers to lay down microscopic electrical traces. Without ASML, none of the cutting-edge chip technology we know today would be possible.

With the stock down about 30% from its all-time high (at the time of this writing), it appears to be a tremendous opportunity to scoop up while it's on sale.

5. Alphabet

Moving to the AI hyperscaler side, Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) looks like a strong investment. Although many assumed that Alphabet had fallen too far behind in the AI arms race to be a worthy competitor, it has emerged as one of the top players. Its generative AI model, Gemini, is one of the best available, and with Alphabet integrating it into its Google Search engine, it's easily one of the most used.

Alphabet still trades at a discount to its big tech peers despite its recent success, and that could be a prime opportunity to make a profit over the next five years.

6. Meta Platforms

Meta Platforms (NASDAQ: META), the parent company of Facebook and Instagram, is also heavily investing in AI. It's spent a ton of money hiring the best AI talent possible, and now it has reached a point where it's focusing that all-star lineup on various AI goals.

Time will tell whether this is a winning strategy, but Meta is giving itself the best chance to succeed by equipping itself with the brightest minds to lead its various AI initiatives.

7. Amazon

Amazon (NASDAQ: AMZN) may not be the first company you think of when you hear AI, but its cloud computing business, Amazon Web Services (AWS), is a huge part of the AI build-out trend. Most companies can't afford to build out a massive data center specifically for AI, so they rent it from a cloud computing provider like AWS.

AWS is a significant contributor to Amazon's profitability, generating 53% of Amazon's operating profits in Q2, despite accounting for only 18% of revenue. Cloud computing has a massive tailwind blowing in its favor, and investing in companies with this business is a genius idea.

8. Microsoft

AWS is the largest cloud computing provider, but Microsoft's (NASDAQ: MSFT) Azure is quickly gaining ground. Azure has grown rapidly over the past few years, with its Q4 FY 2025 growth rate (ending June 30) coming in at 39%. That's far quicker than AWS's 17% growth rate, making Microsoft an interesting stock to watch in this space.

9. SoundHound AI

SoundHound AI (NASDAQ: SOUN) is quite a bit smaller than nearly every company on this list, but it's growing at a rapid pace. SoundHound AI's technology combines AI with audio recognition, which can be used to automate millions of jobs. In Q2, its revenue grew at a jaw-dropping 217% year-over-year pace, providing an incredibly bullish outlook for the future.

Management believes they can deliver 50% organic growth for the foreseeable future, which would lead to an incredible stock performance.

10. The Trade Desk

Last on this list is The Trade Desk (NASDAQ: TTD), which has struggled lately. The stock is down over 60% from its all-time high because it's experiencing issues transitioning users from its old platform to its new AI-first platform, Kokai.

However, The Trade Desk is well-positioned to capitalize on the digital ad market. Once it gets the transition on track, it will become a leading competitor in a rapidly growing space.

Should you buy stock in Nvidia right now?

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Keithen Drury has positions in ASML, Alphabet, Amazon, Broadcom, Meta Platforms, Nvidia, Taiwan Semiconductor Manufacturing, and The Trade Desk. The Motley Fool has positions in and recommends ASML, Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing, and The Trade Desk. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

What Are the 10 Top Artificial Intelligence (AI) Stocks to Buy Right Now? was originally published by The Motley Fool

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Stocks & Markets Podcast: Freedom Capital's Maguire Looks Beyond the Mag 7

TheStreet

Cadence Design Systems

This article is based on TheStreet's Stock & Markets Podcast. Hosted by the veteran Wall Street investor Chris Versace, the weekly podcasts are available early to members of TheStreetPro.

Throughout history, humans have revered the number 7.

The digit has been associated with good luck, features significantly in Christianity, Judaism, Islam and Hinduism. And look what it did for Snow White.

Around Wall Street, investors focused on artificial intelligence have rallied around the so- called Magnificent 7 stocks: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla.

💸💰 💰💸

So Chris Versace, lead portfolio manager at TheStreet Pro, on the recent Stocks & Markets Podcast wondered out loud whether some industries were slowly adopting AI and hadn’t yet gotten the love that investors have put into the Mag 7.

And he posed the question to, and sought related investing ideas from, Ed Maguire, senior director of research at Freedom Capital Markets.

Providing an example, Versace noted that the portfolio at TheStreet Pro includes Axon Enterprises, “which most folks think of [as] tasers, body cameras, but they don't necessarily clue into Axon’s software-and-services business, the cloud that they have and how they can drive productivity inside public safety by bringing AI to market.”

Freedom Capital's Maguire: Aerospace ripe for AI

And he asked Maguire: “Are there areas that you think are ripe for AI adoption that folks aren't really paying attention to?”

The “entire manufacturing sector … certainly aerospace and defense is an area where you have heavy discrete machinery,” Maguire said. Another is real estate and its subsectors: multifamily, industrial, office space, and public spaces, he said.

💥💥Follow TheStreet’s Stocks & Markets Podcast on Apple Podcasts, Spotify, or YouTube. Don’t miss the move!💥💥

And “the ability to apply technology” is not just “to improve public safety, which is what people associate with cameras, but also [to be able to enhance customers’] experience, helping to, reduce lines or queues at large public venues, to have more anticipatory services that businesses can provide for commercial tenants or people living in their homes,” the fund manager said.

Related: Veteran trader has two words of advice for nervous Nvidia investors

“A lot of these advances proceed very steadily, but you don't really notice it because it's a bit of a slow boil.”

Versace asked about particular companies that are best positioned: “I know a lot of folks talk about Nvidia obviously, and to be clear we own Nvidia in the portfolio. But are there other software companies or even other chip companies? … Are there any less obvious needs that folks should be thinking about?”

“In semiconductors, you obviously have the big names like Nvidia (NVDA) and Taiwan Semiconductor,’ (TSM) Maguire said. “But even some of the smaller names, the companies that are enabling the design of systems, like Cadence Design Systems (CDNS) or Synopsys (SNPS) , are really interesting. They play an incredibly critical role.

Maguire: Industrial machinery investment ideas

“When you look at industrial machinery, I think there's some very interesting names, like Johnson Controls, (JCI) Rockwell Automation, (ROK) or Xylem, (XYL) where you're dealing with physical infrastructure. And these companies have been thinking a lot about how to apply intelligence to the data that they collect to manage their physical systems.”

Another area Maguire mentions is what he calls smart health. [“The] application of technology to gene sequencing is incredibly powerful,” he said. “Right now, I think the latest estimate is there are about 1,200 publicly traded biotech companies and maybe another 1,200 that are private that are worth looking at. …

“The cost of sequencing the human genome has dropped by like 99% since [the scientist] Craig Venter first sequenced his own genome. [That decline in costs is] really driving some unbelievable breakthroughs, particularly in oncology.

"And I wouldn't say that there are any specific names because I think you’ve got to be pretty well versed in the science to invest effectively. But I think the impact on potentially life span, even in our lives, is really revelatory and transformative.”

Related: Stocks and Markets Podcast: Strategist gives tips on what to watch for in August

Versace suggested: “So maybe – and I'm not saying that there is an ETF for this – but maybe given your comment, maybe an ETF is a safer way to kind of play it for folks that are kind of interested in dipping their toes in the water but don't have the resources or the time to really investigate.”

Maguire added that “there's a similar argument that can be made really across what we largely call health care, life sciences. Advances in diagnostics or robotic surgery [are] pretty well known. … [Many] people are aware of what [Intuitive Surgical’s (ISRG) DaVinci] is able to do.” DaVinci enables surgeons to perform complex, minimally invasive procedures with enhanced precision, dexterity and 3D vision.

“But you also have even just the ability to automate a lot of the processes in the tangled hairball that makes up the U.S. health care system, applying AI to payments, approvals and processes, the administrative aspect of the health care industry," Maguire said. ["It] offers an enormous amount of potential for value creation.”

Related: The stock market is being led by a new group of winners

This story was originally reported by TheStreet on Sep 8, 2025, where it first appeared in the Investing News, Analysis, and Tips section. Add TheStreet as a Preferred Source by clicking here.

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Taipei Closing Stock Prices

Dow Jones Newswires

Prices in NT$ 
 
                                 Close      Prior     Change   % Change 
  Acer                           31.90      33.40      -1.50      -4.49 
  ASE Technology Holding        171.50     156.00     +15.50      +9.94 
  Asia Cement                    36.30      36.40      -0.10      -0.27 
  ASUSTeK Computer              645.00     645.00       unch       unch 
  Cathay Financial Hldg          63.80      64.60      -0.80      -1.24 
  Cathay Rl Est Dev              21.85      22.40      -0.55      -2.46 
  China Airlines                 21.75      21.65      +0.10      +0.46 
  China Steel                    19.55      19.55       unch       unch 
  D-Link                         17.55      17.65      -0.10      -0.57 
  Evergreen Marine Taiwan       186.50     186.50       unch       unch 
  Far Eastern New Century        27.60      27.45      +0.15      +0.55 
  Formosa Plastics               38.15      37.80      +0.35      +0.93 
  Hua Nan Fin Hldgs              29.10      29.15      -0.05      -0.17 
  Nan Ya Plastics                38.40      38.45      -0.05      -0.13 
  Quanta Computer               260.00     258.50      +1.50      +0.58 
  Taiwan Semicon Mfg          1,180.00   1,180.00       unch       unch 
  Tatung Co                      38.65      38.75      -0.10      -0.26 
  TCC Group Holdings             22.30      22.65      -0.35      -1.55 
  TECO Electric & Machinery      72.40      68.00      +4.40      +6.47 
  Uni-President Ents             78.90      78.10      +0.80      +1.02 
  United Microelectronics        41.60      41.20      +0.40      +0.97 
  Walsin Lihwa                   22.25      23.30      -1.05      -4.51 
Source: FactSet