Nvidia shares pop as analysts dismiss AI bubble concerns
Today, we get the PPI report, and estimates are for it to rise by 0.3% m/m, down from 0.9% last month, with the PPI y/y rate expected to remain at 3.3%. If the PPI stays unchanged on a y/y basis, I would be really surprised. Every Fed regional survey shows that prices paid measures have increased significantly this year, and historically, these surveys track inflation metrics extremely well.
It would seem highly odd to me not to see producer prices reflect this in a more meaningful way than they have so far.
It would be surprising if the PPI index didn’t show some kind of uptick for inflation. Then again, this is the BLS—and today we learned that 911,000 fewer jobs were created than originally reported, marking the largest revision to non-farm payrolls ever on an absolute basis.
Meanwhile, Oracle (NYSE:ORCL) didn’t report the most stellar quarter, yet the stock is up about 25% after hours because it signed three deals that boosted its performance obligations by roughly 359% to $455 billion. On the call, we learned the customers were none other than OpenAI (already known), Meta (NASDAQ:META), and—interestingly—Nvidia (NASDAQ:NVDA).
Here’s where it gets puzzling: Nvidia sells GPUs to Oracle, and then Nvidia signs contracts to use Oracle’s data centers. So what—Oracle then buys more GPUs? At the same time, Meta continues to spend at an astonishing pace, as does OpenAI.
It feels like one big revolving door to me with all the same customers and suppliers. I could see if we saw big contracts for new players, but it’s all the same companies. I’m simply not smart enough to make sense of it—because it just doesn’t feel right.