(Seoul=Yonhap Infomax) Min Jae Lee – While Nvidia Corp.'s latest earnings have eased some concerns over a potential bubble in artificial intelligence (AI), several Wall Street analysts remain wary of overheating in data center investments.


On the 20th (local time), analysts told CNBC that Nvidia's results are seen as a key barometer for the health of the AI sector, but cautioned that the company's performance does not represent the entire industry.


Gil Luria, analyst at D.A. Davidson, said, "Many people may have felt relieved, but there was never any need to worry about Nvidia ahead of its earnings release."


He explained that Nvidia's major clients—including Microsoft Corp., Amazon.com Inc., Alphabet Inc. (Google), and Meta Platforms Inc.—had already signaled plans to accelerate spending on AI chips, and this was reflected in Nvidia's results.


This robust demand has also benefited other chip stocks linked to Nvidia, according to analysts.


However, Luria emphasized, "Concerns about an AI bubble are not about Nvidia itself," adding, "The real worry is about companies taking on significant debt to build data centers."


Nvidia's AI chips are used in data centers owned by so-called hyperscalers—large technology firms such as Microsoft and Google. These companies have been financing data center expansion with debt to meet surging AI demand.


Luria noted, "While Nvidia-related concerns have been clearly resolved by the earnings report, that does not mean we should stop monitoring companies borrowing or taking out loans to construct data centers."


He added, "Data centers are inherently speculative investments. In two to three years, when the world reaches maximum capacity and the industry cycle turns, these assets could face liquidation."


Billy Toh of CGS International Securities commented, "Nvidia's earnings are a strong signal of AI infrastructure spending," but cautioned, "They are not a reliable gauge of whether the AI economy is truly maturing across the industry."


He said, "To understand industry stability, it's more meaningful to look at AI service adoption and monetization at companies like Microsoft or Adobe. Ultimately, the sustainability of the AI boom will be confirmed by real customer demand and recurring revenue."



mjlee@yna.co.kr


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