Trade war and geopolitical strains are casting a wet blanket over the global business climate – and have put a stop to last year's AI rally.
The stock of AI giant Nvidia, an American manufacturer of advanced chips, is down 2.2 percent since the turn of the year. And Bloomberg's index for all seven Magnificent 7 companies is down 6.5>Stricter export restrictions
For Nvidia's part, the decline is largely due to a major setback since US President Donald Trump and his administration tightened restrictions on technology exports to China. Jensen Huang has criticized the decision as something that only benefits Chinese competitors, and Nvidia estimates that it will cost $5.5 billion just this year. And among analysts, many are counting on even greater setbacks further ahead.
In the report for the fiscal year's first quarter, ended in April, the market expects Nvidia's revenues will still continue to rise. The average forecast is plus 66 percent to $43.4 billion, according to Bloomberg.
The gross margin is expected to be pressured by costs to get production up and running for new chips. But the adjusted profit is expected to lift significantly to $21.3 billion, from $15.2 billion during the same quarter last year.
Prior to the report, Nvidia has signaled that new chips will be developed that can be sold in China despite Trump's restrictions. At the same time, production of Nvidia's new so-called Blackwell chip – for next-generation AI – appears to have gotten underway.
Supercomputer project in Sweden
The market hopes to get more information about Nvidia's China plans in the report and a better picture of how it looks when it comes to the company's forecasts for investments in AI services and smart cloud services.
Prior to the report, Nvidia's Jensen Huang – in his traditional leather jacket – visited Sweden over the weekend.
He was appointed honorary doctor at Linköping University and presented a new supercomputer project in Sweden together with companies within the Wallenberg sphere. Jensen Huang also flagged the establishment of a new technical center in Sweden, to promote research with industrial partners.
