An A.I. ‘Tipping Point’ Ignites a New Market Rally

An A.I. supercycle

For now, Nvidia is living up to the lofty title that Goldman Sachs bestowed on it this week — “the most important stock on planet Earth” — after its blowout earnings report.

Markets are looking up today, as are investors’ and governments’ hopes for the artificial intelligence boom, as strong demand for the chipmaker’s products suggest that there’s more room for the trend to run.

Nvidia is up 13 percent in premarket trading after results that surpassed high analyst expectations (and spurred a torrent of exuberant memes). Jensen Huang, the company’s C.E.O., said that Nvidia was seeing a “tipping point” in demand for A.I. systems.

Among the highlights:

• Nvidia’s annual revenues leaped a whopping 265 percent year-on-year to $22.1 billion. It also projected that sales this quarter would hit about $24 billion, easily outpacing forecasts of $22 billion.

• Huang told analysts that the results represent Year One of “a 10-year cycle of spreading this technology into every single industry.” Demand is so strong that Huang had to reassure analysts that they were allocating chip orders to customers “fairly.”

• One red flag: Sales fell in China, a once-vital market that has been affected by U.S. export limits on some advanced chips.

Market watchers are crediting Nvidia with turbocharging a global rally. Stocks in Asia and Europe rallied on the news, including ASML, the Dutch chips-equipment maker. Meanwhile, the Nikkei 225, a benchmark index in Japan, closed at a record that surpassed a level last seen 34 years ago as global investors continue to sell Chinese stocks in favor of Japanese shares.

Sky-high A.I. expectations go beyond stocks. Some economists have begun to speak of once-in-a-generation productivity gains delivered by the technology automating tasks, like drafting emails and proposals.