Latest news with #AI
CNN
13 minutes ago
- Business
- CNN
Nvidia's hit from being caught in the US-China tech war isn't as bad as expected
Nvidia missed out on $2.5 billion in additional revenue during the first quarter of this year, after the Trump administration placed fresh restrictions on exports of its H20 artificial intelligence chips to China last month. Despite those unearned sales — revealed in the company's earnings report Wednesday — Nvidia took a smaller blow from the new H20 restrictions during the quarter than expected. It took a $4.5 billion charge in the quarter because of the export controls, although it had warned investors last month the hit might be as high as $5.5 billion. Investors had been watching the impact of the H20 export controls because they underscore Nvidia's increasingly tenuous position at the center of an increasing US-China trade and tech war. The smaller than expected charge is likely to be viewed as a positive sign, although the company added it expects to lose out on another $8 billion in revenue during the second quarter because of the H20 controls. Nvidia's shares rose 3.5% in after-hours trading following the report. Nvidia last year released the H20 chip to accommodate stringent US export controls to China while maintaining access to the market, which accounted for around 13% of its sales last year. But in April, the White House told the company it would need a special license to export the H20 — which is widely believed to have contributed to the powerful Chinese AI model DeepSeek — to China. Nvidia CEO Jensen Huang has called US chip export controls a 'failure.' But despite the uncertainty caused by the White House's trade policy, Nvidia's overall business continues to grow at a striking clip. The chipmaker exceeded Wall Street analysts' expectations for both revenue and profits during the first quarter. It earned $44.1 billion in revenue, up 69% from the same period in the prior year. And its net income grew 26% year-over-year to $18.8 billion. 'Even during a period of industry consolidation — with growing competition and geopolitical tensions creating a more challenging macro environment — the company demonstrated its ability to focus on the right operational areas,' Thomas Monteiro, senior analyst at said in emailed commentary. He added that the smaller than expected impact from the H20 controls 'highlighted Nvidia's adaptability to changing market conditions.' Given its central role building many of the chips that power AI systems, Nvidia's earnings are viewed as a barometer for the larger tech sector. Uncertainty around tariffs and trade policy, as well as tough questions from investors about returns on AI spending, have loomed over the industry. But Nvidia CEO Jensen Huang said in a statement Wednesday that demand for the company's AI technology remains 'incredibly strong.'
New York Times
23 minutes ago
- Business
- New York Times
A.I. Chipmaker Nvidia's Revenue Jumps 69% to $44.1 Billion
Nvidia's business prospects have been whipsawed by the U.S. government lately. Last month, the government blocked the sale of artificial intelligence chips to China. Weeks later, it approved the sale of similar chips to the Middle East. Amid the turmoil, Nvidia still maintained its breakneck growth as the leading provider of the computer chips used for building artificial intelligence. Nvidia said on Wednesday that sales in its most recent quarter rose 69 percent to $44.1 billion from a year earlier. Its net income rose 26 percent to $18.78 billion. The company exceeded Wall Street's expectations for sales of $43.28 billion, but fell short of predictions for a profit of $19.49 billion. Nvidia's revenue and profit rose despite it saying on Wednesday that the Trump administration's restrictions on chips to China would cost it $5.5 billion. The restrictions have pushed Nvidia out of the market for A.I. chips in China, the world's largest buyer of semiconductors, which are used to power smartphones, cars and other electronics. Nvidia also projected that revenue in the current quarter would rise 50 percent from a year ago to $45 billion, as it expands sales of its newest A.I. chip, Blackwell. The sales forecast is in line with Wall Street's prediction of $45.75 billion, suggesting that the tech industry's embrace of artificial intelligence is in its early stages, with ample room to run. Shares in Nvidia rose more than 4 percent in after-hours trading. It finished the trading day as the second-most-valuable company in the world behind Microsoft and ahead of Apple, with a market value of $3.3 trillion. 'Countries around the world are recognizing A.I. as essential infrastructure — just like electricity and the internet — and Nvidia stands at the center of this profound transformation,' Jensen Huang, the company's chief executive, said in a statement. The company is showing its strength, even among the tech industry's largest companies. For the first time in the A.I. era, its quarterly sales surpassed those of Meta, the social media pioneer. Nvidia's net income was 13 percent larger than Meta's profit in their most recent quarters. Nvidia has been the early winner in the tech industry's race to develop artificial intelligence. Mr. Huang cornered the market on A.I. chips by being the first chipmaker to develop the software and servers that would train A.I. systems to recognize images and predict words. But government officials have grown increasingly alarmed about the way A.I. could be used by adversaries like China to develop autonomous weapons and coordinate military strikes. Those worries have led Washington officials to crackdown on Nvidia's sales. Mr. Huang spent much of the past few months pushing back on that by traveling the world to meet with government officials. An April meeting with President Trump proved to be unsuccessful when the Commerce Department later pushed forward on limiting sales to China. Mr. Huang later flew to Beijing, where he pledged to find a new way to sell chips there, and then to Taiwan, where he complained that the U.S. government's restrictions had been a failure. His efforts haven't changed the trajectory of Nvidia's business in China. Since the U.S. government began restricting chip exports, Nvidia's sales in China have been cut to 13 percent of total revenue from 21 percent two years ago. But Mr. Huang has had more success in persuading the U.S. government to loosen up sales to other countries. After his urging, the Trump administration rolled back Biden-era rules that restricted A.I. chip sales abroad. The change paved the way to a blockbuster deal this month between the United States and the United Arab Emirates to build the world's largest international hub of A.I. data centers. Nvidia has made selling more chips to governments a key part of its strategy. The company relies on customers like Microsoft, Amazon, Google and Meta for a large portion of its sales. It wants to expand its customer base by adding buyers across Europe, Asia and the Middle East, where Mr. Huang has said A.I. could be part of the national infrastructure much like a telecommunications network. The United States also doesn't have the energy resources to support the current demand for data centers. The maximum amount of power available this year for many companies is 50 megawatts, enough to support about 25,000 of Nvidia's newest A.I. chips. By comparison, OpenAI is planning a 200-megawatt data center next year at an A.I. campus in Abu Dhabi that could support 100,000 of Nvidia's chips. The deal was important because Nvidia has a window to sell to countries before competition for A.I. chips increases, said Holger Mueller, principal analyst at Constellation Research, a tech research firm. 'Now they're the only game in town,' Mr. Mueller said of Nvidia. 'These Middle East countries really need them.'
Yahoo
26 minutes ago
- Automotive
- Yahoo
BMO Capital Hikes AutoZone Price Target to $4,100, Affirms Outperform Stance
AutoZone, Inc. (NYSE:AZO) is well-positioned to continue edging higher. That's the sentiment echoed on May 27 by BMO Capital as the firm reiterated an Outperform rating on the stock. Additionally, the analyst firm hiked its stock price target to $4,100 from $3,850. An engineer at a workbench surrounded by automotive parts, tools, and microchips. The stock has gained 13%, outperforming the S&P 500, which is up by nearly 1%. The impressive runs stem from AutoZone's strong performance over the past year, characterized by a 32% return. In addition, it boasts a healthy gross profit margin of 53.13% and a free cash flow of over $2 billion. Tristan Thomas-Martin of BMO Capital shared insights on the automotive parts company's latest performance and its future outlook. Autozone delivered impressive third-quarter fiscal 2025 results as the company's international business continues to deliver strong results. The results also came in better than expected, attributed to the company's aggressive expansion. The company opened 54 new stores in the US, 25 in Mexico, and five in Brazil. Revenue in the third quarter was up 5.4% to $4.5 billion. Same-store sales were up 3.2%, driven by a 5.0% increase in domestic sales as international same-store sales grew by 8.1%. However, net income fell by 6.6% to $608.4 million, and diluted earnings per share shrunk by 3.6% to $35.36. Thomas-Martin acknowledged challenges affecting AutoZone's margins, including commercial sales growth, currency headwinds, and ongoing investments. Despite this, he remains optimistic about the company's long-term market potential in a fragmented industry. AutoZone is a specialty retailer that deals in automotive replacement parts and accessories. It offers a wide variety of hard parts, maintenance items, accessories, and non-automotive products. In addition to their retail stores, AutoZone also provides commercial sales to repair shops and other businesses. While we acknowledge the potential of AutoZone, Inc. (NYSE:AZO) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than AZO and that has 100x upside potential, check out our report about the cheapest AI stock. READ NEXT: and . Disclosure: None.
Yahoo
26 minutes ago
- Business
- Yahoo
Trading Day: Investors shrug off Nvidia caution
By Jamie McGeever ORLANDO, Florida (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist Hawkish Fed minutes A day of drift - stocks lower and bond yields higher - was the hallmark of global markets on Wednesday as investors, in the absence of major fresh news on tariffs or developments in long-dated bonds, waited for Nvidia's results after the U.S. close. In my column today I look at why the United States may follow Japan in looking to shorten the maturity of its debt profile, as investors turn increasingly reluctant to hold long-dated bonds. More on that below, but first, a roundup of the main market moves. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. 1. Fed minutes saw rising inflation, jobless risks as ofMay meeting 2. Japan's quick-fix for bond markets sets a global testcase 3. Demand at Japan's 40-year bond auction sinks as fiscaldoubts prevail 4. Lagarde's euro 'battle cry' emphasizes EU cash need:Mike Dolan 5. ECB's Lagarde determined to complete her term,spokesperson says Today's Key Market Moves * Wall Street closes in the red, the S&P 500 and Dow off0.6% and the Nasdaq down 0.5%, tracking similar-sized losses inEurope. * Nvidia shares rose nearly 4% in after-hours tradingfollowing the chipmaker's earnings and outlook. * U.S. Treasury yields rise, by as much as 5 bps at thelonger end, bear-steepening the curve. A record $70 billion saleof 5-year notes goes well, and earlier, Japan's 40-year yieldrose after a weak auction. * Brazil's real is one of the biggest movers in FX, falling1% back through 5.70 per dollar. * Oil rises more than 1% on supply concerns as OPEC+agreed to leave its output policy unchanged and as the Chevron from exporting Venezuelan crude. Investors shrug off Nvidia caution Nvidia on Wednesday was the last of the U.S. 'Magnificent Seven' tech giants to report earnings. It announced record quarterly revenue in the first quarter of fiscal year 2026 but warned that tighter U.S. curbs on exports of its AI chips to key semiconductor market China will hit second quarter revenue. Investors cheered the news though, sending shares up as much as 4% immediately after the release. The relationship between Nvidia's share price and its long-term revenue outlook has been tight, and both were near recent highs before Wednesday's results. Nvidia said on Wednesday it expects revenue this quarter of around $45 billion, almost $1 billion below analysts' average estimate. As Deutsche Bank's Jim Reid pointed out earlier on Wednesday, there is still a "significant growth runway" required to reach the current consensus for fiscal year 2030 of around $375 billion, underlining the volatile nature of the stock. Indeed, although U.S. 'Big Tech' has taken a back seat to trade wars, U.S. fiscal concerns and trouble at the long end of global bond markets as the main drivers of investor sentiment recently, Nvidia shares haven't stood still - since the market low on April 7, they have rebounded 50%, outperforming the Roundhill 'Magnificent Seven' ETF and broader Nasdaq. The 'Mag 7' shares account for almost a third of the entire S&P 500 market cap, less than the peak of 35% late last year but up from the April low and still an extraordinarily high concentration of wealth in so few stocks. Big Tech has been quiet lately, but that's unlikely to last. The other big focus for investors in the U.S. session was the minutes of the Federal Reserve's May 6-7 policy meeting. There is usually something for everyone in these releases, but if there is one indication of where policymakers are leaning amid the fog of tariff uncertainty it may be this: "inflation" was mentioned 85 times, while "employment" and "labor market" were mentioned 23 times and 16 times, respectively. Looking ahead to Thursday, investors in Asia will react to Nvidia's earnings and guidance from after the U.S. closing bell the day before. Other highlights should be an expected interest rate cut from the Bank of Korea, revised U.S. GDP figures, and a $44 billion sale of 7-year U.S. Treasury bonds. Pressure on U.S. to follow Japan in debt profile rethink In the face off between heavily indebted developed economies and increasingly wary investors, Japan has blinked first, announcing that it will reconsider its debt profile strategy amid plunging demand for long-dated bonds. The U.S. could soon follow. Japan has the second-longest debt maturity profile of the G7 nations, with an average of around 9 years. Decades of ultra-low policy rates allowed Tokyo to borrow huge amounts at very low cost across the Japanese Government Bond yield curve. But in recent weeks, 30- and 40-year yields have soared to record highs, as appetite for long-dated paper at JGB auctions has dried up, a one-two punch that has forced officials to consider reducing issuance of long-term bonds in favor of short-dated debt. Many of the debt pressures bearing down on Tokyo are also being felt in Washington. The U.S. no longer boasts a triple-A credit rating, following the downgrade from Moody's earlier this month, and the non-partisan Congressional Budget Office projects federal debt held by the public will rise to a record 118.5% of GDP over the next decade from 97.8% last year. Net interest payments will rise to 4.1% of GDP from 3.1%, it predicts. Finally, there is Trump's tax-cut bill, which is projected to lump $3.8 trillion onto the federal debt over the next decade, according to the CBO. All this is creating understandable unease among investors, and even though foreign demand at bill auctions has remained high, on average, demand at bond auctions is the lowest in years. The Treasury may be forced to grab a page out of Japan's recent playbook and shorten its maturity profile. WAM The U.S. has the shortest 'weighted average maturity' (WAM) of all G7 countries at 71.7 months, according to the Treasury. That's due to a mix of factors, including rising deficits, Fed holdings of longer-dated bonds, and high liquidity and demand at the short end of the curve. But this figure has rarely been higher on its own terms. While the WAM reached a record 75 months briefly in 2023 and was elevated during the post-pandemic period, it has otherwise rarely exceeded 70 months. Indeed, the average going back to 1980 is 61.3 months. Shifts in the Treasury's WAM over the past half century have largely been driven by the interest rate environment, economic and financial crises and investor preference. While today's mix of market, economic and geopolitical trends is unique, it doesn't point to strengthening investor demand for long-dated bonds. The decades before the pandemic – the period known as the 'Great Moderation' – were generally marked by falling interest rates, flattening yield curves, and weak inflation. That era is over, or at least that's the growing consensus among investors and policymakers. This largely reflects the belief that inflation pressures in the coming decades will be higher than those seen during the 'Great Moderation' – particularly given the move toward high tariffs and protectionism – meaning interest rates are likely to remain 'higher for longer'. At the same time, America's apparent move toward isolationism and increased political volatility is apt to make global investors consider reducing their elevated exposure to dollar-denominated assets. That could make it harder for the Treasury to borrow long term at acceptable rates. PRESSURE POINTS These are broad assumptions, of course, and there are many moving parts. A sharp economic slowdown or recession could flatten the yield curve and spark an increase in longer-term issuance. But the curve is currently steepening, and the U.S. 'term premium' - the risk premium investors demand for lending 'long' to Treasury instead of rolling over 'short' loans - is the highest in over a decade and rising. This creates two problems. First, the Treasury may prefer to borrow longer term but not if yields are prohibitively high. Second, even though the U.S. can borrow more cheaply at the short end when the curve is steepening, this increases the 'rollover risk', meaning the government becomes more vulnerable to sudden moves in interest rates. T-bills' 22% share of overall outstanding debt is already above the Treasury Borrowing Advisory Committee's recommended 15-20% share, but it's hard to see that coming down much any time soon. Morgan Stanley analysts earlier this month outlined a "thought experiment" whereby low demand for notes and bonds could see the share of bills approach 30% by 2027. Ultimately, Treasury supply will largely depend on investor demand. If primary dealers indicate a preference for shorter-dated bonds, the 'WAM' will probably fall. Japan won't be the only developed economy rethinking its onerous borrowing plans. What could move markets tomorrow? * Reaction to Nvidia earnings * South Korea's interest rate decision * U.S. GDP, PCE inflation (Q1, second estimate) * U.S. weekly jobless claims * U.S. 7-year Treasury note auction * Several Fed officials speak at various events. They are:Richmond Fed President Thomas Barkin, Chicago Fed PresidentAustan Goolsbee, Fed Governor Adriana Kugler, and San FranciscoFed President Mary Daly. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. (By Jamie McGeever)
Yahoo
26 minutes ago
- Business
- Yahoo
More than 2 years after ChatGPT, newsrooms still struggle with AI's shortcomings
An inaccurate AI-produced reading list recently published by two newspapers demonstrates just how easy it still is for publishers to circulate AI slop. The Chicago Sun-Times and the Philadelphia Inquirer last week published a summer reading insert produced by King Features, a Hearst Newspapers subsidiary that provides the pair with licensed content. While the insert included real authors, the recommended books were mostly fake. Ultimately, 404 Media found that a human writer had produced the list using ChatGPT and failed to fact-check it. 'I do use AI for background at times but always check out the material first,' the insert's writer told 404 Media. 'This time, I did not and I can't believe I missed it because it's so obvious. No excuses.' OpenAI's launch of ChatGPT more than two years ago kicked off an AI gold rush, resulting in a deluge of AI-infused tools aiming to help people find information online without sifting through lists of links. But that convenience comes at a cost, with AI chatbots continuing to offer incorrect or speculative responses. Newsrooms have adopted AI chatbots with some trepidation, aware that the technology opens up new opportunities, as well as potential high-profile blunders — all amid fears that AI could lead to job losses and eat into news outlets' revenue sources. Not adopting the technology, however, means risking being left behind as others use AI to comb through enormous datasets, incubate ideas and help readers navigate complicated narratives. Though many major newsrooms have adopted AI guidelines since ChatGPT's launch, the sheer size of some newsrooms' staff, coupled with multiple external partnerships, complicates identifying where embarrassing AI blunders can occur. The insert incident exemplifies the myriad ways AI errors can be introduced into news products. Most supplements that the Sun-Times has run this year — from puzzles to how-to guides — have been from Hearst, Tracy Brown, the chief partnerships officer for Sun-Times parent Chicago Public Media, told CNN. However, whether it's an insert or a full-length story, Brown stressed that newsrooms have to use AI carefully. 'It's not that we're saying that you can't use any AI,' she said. 'You have to use it responsibly and you have to do it in a way that keeps your editorial standards and integrity intact.' It's precisely because AI is prone to errors that newsrooms must maintain the 'fundamental standards and values that have long guided their work,' Peter Adams, a senior vice president of research and design at the News Literacy Project, told CNN. That includes being transparent about using AI in the first place. Many high-profile publishers have been candid about how their newsrooms use AI to bolster reporting. The Associated Press — considered by many within the news industry to be the gold standard for journalism practices, given how it has used AI for translation, summaries and headlines — has avoided gaffes by always including a human backstop. Amanda Barrett, the AP's vice president of standards, told CNN that any information gathered using AI tools is considered unvetted source material, and reporters are responsible for verifying AI-produced information. The AP also checks that its third-party partners have similar AI policies. 'It's really about making sure that your standards are compatible with the partner you're working with and that everyone's clear on what the standard is,' Barrett said. Zack Kass, an AI consultant and former OpenAI go-to-market lead, echoed Barrett, telling CNN that newsrooms need to treat AI 'like a junior researcher with unlimited energy and zero credibility.' This means that AI writing should be 'subject to the same scrutiny as a hot tip from an unvetted source.' 'The mistake is using it like it's a search engine instead of what it really is: an improviser with a genius-level memory and no instinct for truth,' he added. High-profile AI mistakes in newsrooms, when they happen, tend to be very embarrassing. Bloomberg News' AI summaries, for example, were announced in January and already have included several errors. The LA Times' Insights AI in March sympathized with the KKK within 24 hours of its launch. And in January, Apple pulled a feature from its Apple Intelligence AI that incorrectly summarized push notifications from news outlets. That's only recently. For years, newsrooms have struggled when AI has been allowed to proceed unchecked. Gannett in 2023 was forced to pause an AI experiment after several major errors in high school sports articles. And CNET in 2023 published several inaccurate stories. Still, as Felix Simon, a research fellow in AI and digital news at the University of Oxford's Reuters Institute for the Study of Journalism, points out, 'the really egregious cases have been few and far between.' New research innovations have reduced hallucinations, or false answers from AI, pushing chatbots to spend more time thinking before responding, Chris Callison-Burch, a professor of computer and information science at the University of Pennsylvania, told CNN. But they're not infallible, which is how these incidents still occur. 'AI companies need to do a better job communicating to users about the potential for errors, since we have repeatedly seen examples of users misunderstanding how to use technology,' Callison-Burch said. According to Brown, all editorial content at the Sun-Times is produced by humans. Looking forward, the newspaper will ensure that editorial partners, like King Features, uphold those same standards, just as the newspaper already ensures freelancers' codes of ethics mirror its own. But the 'real takeaway,' as Kass put it, isn't just that humans are needed — it's 'why we're needed.' 'Not to clean up after AI, but to do the things AI fundamentally can't,' he said. '(To) make moral calls, challenge power, understand nuance and decide what actually matters.'
