NVIDIA results highlight enduring AI infrastructure build amid uncertain markets

NVIDIA – adding to the earnings anchor 

For asset allocators, 2025 has been defined by volatility. The year began with a sanguine macroeconomic backdrop but was quickly complicated by government sector layoffs and tariff negotiations. Amidst this friction, earnings have continued to provide a robust anchor for market strength and NVIDIA’s third-quarter results confirmed that an important driver of earnings, the build-out of artificial intelligence infrastructure, remains intact.  

The AI infrastructure build-out 

NVIDIA’s financial results provided concrete evidence that the capital expenditure cycle for artificial intelligence is structural rather than transient. The company reported quarterly revenue of US$57.0 billion, a 62 percent increase from the previous year, with its Data Centre segment accounting for US$51.2 billion of that total. The CEO offered significant visibility into future demand, projecting approximately US$500 billion in orders for its Blackwell and Rubin platforms through 2026. Crucially, the company estimates the annual market for AI infrastructure could reach between US$3 trillion and US$4 trillion by the end of the decade.  

A broadening market landscape 

While NVIDIA anchors the technology thesis, recent market behaviour highlights the risks of over-concentration and the benefits of geographic diversification. In October, the resolution of escalating trade tensions between the United States and China drove a global equity rally that extended beyond technology stocks. Following a comprehensive trade agreement that reduced tariffs and paused export controls, Asian markets rose 7.10 percent, significantly outperforming US large-cap stocks. This performance divergence serves as a reminder that a pause in US technology leadership does not necessitate a market correction. 

Earnings and Valuation Fundamentals 

The global economic backdrop supports a narrative of broadening participation. During the third quarter, 82 percent of US companies reported positive earnings surprises. While the Information Technology sector continued to lead with 27.3 percent growth, the aggregate strength across the index suggests the earnings recovery is widening. Looking ahead, analysts project earnings growth to accelerate in 2026 across most equity markets. This outlook, combined with continued monetary easing, provides a supportive environment for a broader group of sectors and regions to deliver improved earnings. 

Conclusion:  

The prevailing anxiety surrounding market concentration requires a nuanced perspective. While volatility is inherent in parts of the equity market, many additional areas can take up the baton as looser monetary policy and recovering economic growth drive a broader earnings recovery. The resilience of global markets in 2025 demonstrates that equities are not a "one-legged stool." The convergence of lower interest rates, fiscal adjustments, and accelerating global growth is narrowing the gap between the technology leaders and the rest of the market. This environment argues for a strategy that maintains exposure to the secular growth of AI while aggressively diversifying into sectors and regions poised to benefit from the normalising economic landscape. 

Looking ahead 

While the signs are positive from an earnings and AI infrastructure buildout perspective, we are conscious that markets are very skittish with equity market volatility rising to multi-month highs. There is a prevailing feeling that any bad news will have large downside consequences, and upside from here in the immediate term is limited. As a result, we have taken some US equity exposure out of the Prima range of funds to cushion us if markets do take a tumble. 

Key upcoming markers are the release of post-shutdown US data and any signs of weakening consumer spending before the holidays. The Federal Reserve’s December rate decision will then offer a clearer view of the US economy after the information blackout.