The Nvidia Paradox: Record Profits Fail to Halt Tech Sector Sell-off

Although Nvidia officially confirmed its dominance in the graphics processor market, delivering financial data showing a 75% increase in data center revenue, financial markets reacted with a sell-off. This phenomenon, described by analysts as 'selling the news,' indicates an extremely high bar of expectations for the leaders of the AI revolution. Investors have begun to question not only current valuations but also the pace of return on the massive investments in cloud infrastructure being made by companies like Amazon or Microsoft. Nvidia's market capitalization, exceeding $4.75 trillion, has become a symbol of capital concentration that is now raising concerns about the stability of the entire S&P 500 index. The situation in Asia was equally dynamic. The Seoul stock exchange recorded a record outflow of foreign capital amounting to $4.7 billion, which broke a six-day series of gains for the Kospi index. This reaction followed earlier euphoric demand for shares of memory producers like Samsung Electronics and SK Hynix, which have gained over 50% in value this year. The sharp movements even led to a temporary halt in trading for some ETFs in Shanghai due to unnaturally high market premiums relative to the underlying assets. The current correction in the tech sector evokes memories of the dot-com bubble burst in the early 2000s, when companies building internet infrastructure lost value after a period of speculative peaks. In Europe, the mood was more subdued, with some indices, including London's FTSE 100, reaching record levels. Investors began a rotation of capital towards traditional companies and service software firms, which had previously suffered due to fears of competition from AI. An example was the steady rise in Salesforce's share price or the dynamic rebound of Dell Technologies, whose announcement of doubling AI server revenues allowed for a 6% gain in after-hours trading. However, the situation is complicated by geopolitical tensions in the Middle East and South Asia, prompting some market players to flee towards safe havens like gold or US Treasury bonds. „We have booked orders for AI-optimized servers totaling 64 billion dollars in fiscal year 2025/2026 and are entering the new fiscal year with a record backlog of 43 billion dollars.” — Chief Operating Officer of Dell Technologies In summary, financial markets are currently in a phase of verifying real profits from cloud technologies. While hardware manufacturers report unprecedented profits, investors are worried about the long-term profitability of the entire ecosystem and whether high operational costs will lead to a drain on the financial resources of the world's largest corporations.