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The AI Investing Pulse

May 29th, 2025

In this Week’s Edition:

1. Analysis - Nvidia Crushes Estimates with Record Revenue

2. Stock Ideas - Looking for the Next Palantir Stock?

3. News - Warren Buffett's AI Investment Strategy

4. Startups - How the Founders of Tomorrow are using AI Agents Today

5. Trends - 7 AI Cybersecurity Trends

6. Other News - AI Won't Make us Lazy, It'll Make us Smarter

Nvidia Crushes Estimates with Record Revenue Despite China Export Restrictions

Nvidia delivered a spectacular Q1 performance, reporting record revenue of $44.1 billion—up 69% year-on-year—despite a $4.5 billion charge related to US export restrictions on its H20 AI chips destined for China. Looking ahead, the company expects ongoing growth but flags export controls as a material risk for investors to consider.

Q1 Financial Overview: Revenue and Earnings Surpass Expectations Driven by Data Centre Growth

For the quarter ended 27 April (fiscal Q1 2026), Nvidia comfortably exceeded market forecasts. Revenue reached $44.1 billion versus analyst estimates of approximately $43.3 billion, marking a 12% sequential increase and an impressive 69% year-on-year growth.

The surge was driven predominantly by the Data Centre segment, which includes AI chips and networking products. This division posted sales of $39.1 billion—a 73% increase year-on-year—and accounted for 88% of total revenue. Exceptional demand for AI infrastructure supporting cloud computing, generative AI, and large language models remains the key growth engine.

Adjusted earnings per share (non-GAAP) came in at $0.81, ahead of the anticipated $0.73. Excluding the significant $4.5 billion inventory charge related to the H20 chips, non-GAAP EPS would have been approximately $0.96. Despite this strong performance, annual EPS growth slowed to 33%, while gross margins softened to 61%, primarily due to the export-related inventory write-down.

Export Restrictions Impact on Earnings and Outlook

A key challenge this quarter was a $4.5 billion write-down on excess inventory of H20 AI chips—specialised processors intended for data centres—that Nvidia could not sell in China due to export restrictions. CEO Jensen Huang estimated that revenue would have been $2.5 billion higher absent these limitations.

For fiscal Q2, Nvidia projects revenue of approximately $45 billion, factoring in an $8 billion reduction due to continuing export constraints. This guidance falls slightly short of analysts’ consensus forecasts of $45.9 billion, underscoring the ongoing headwind these restrictions represent.

Market Reaction and Investor Insights

Following the announcement, Nvidia shares climbed approximately 3% in after-hours trading, signalling that investors prioritised the company’s robust revenue growth and strong AI demand over the earnings hit and slightly cautious guidance.

Nvidia is targeting margin improvement in the coming quarters, aiming for gross margins in the mid-70% range later this year as it manages inventory and supply chain factors. Investors should closely monitor developments in export regulations and Nvidia’s competitive response, as these will influence the stock’s trajectory.

The AI Stock Tracker

Our in-house AI Stock Tracker scans 173 AI-linked companies twice weekly using a growth-weighted model. To qualify for our Watchlist, a stock must achieve a score of 70 or above (out of 100) and rank in the top 20% for momentum (relative strength ≥ 80).

Nvidia (NVDA) performs exceptionally well on the growth score, reflecting its robust fundamentals and strong market position. While its relative strength has yet to fully catch up, this is likely to improve following its strong Q1 results, potentially securing Watchlist status soon.

Astera Labs (ALAB) operating in the same semiconductor sector and AI chip stack as Nvidia, shows strong growth and fundamentals and is gaining momentum with improving relative strength, making it a candidate for the Watchlist if this trend continues. Conversely, CoreWeave (CRWV), also part of the AI infrastructure ecosystem, exhibits exceptional relative strength but appears expensive with weaker fundamentals, making it a more speculative momentum play.

Looking Ahead: Overnight Tariff Rulings Offer Potential Upside Amid Ongoing Risks

While Nvidia faces near-term challenges from US export restrictions to China, recent developments provide a potential silver lining. The US Court of International Trade has deemed the majority of tariffs imposed on Chinese imports unlawful, opening the door to a possible easing of trade barriers affecting the semiconductor sector. If these rulings lead to reduced tariffs, companies like Nvidia could benefit from lower costs and smoother supply chains, supporting margins and growth.

Investors should remain mindful of ongoing geopolitical risks but also consider this emerging opportunity as part of the evolving landscape in AI infrastructure and semiconductor markets. Nvidia’s strong fundamentals and market leadership position it well to navigate these challenges and capitalise on future tailwinds.

_{Disclaimer - This content is provided for informational purposes only and does not constitute investment advice, personal recommendations, or an invitation to engage in any investment activity. The information presented is derived from publicly available sources and should not be solely relied upon for making investment decisions. Always consult with a qualified financial professional before making investment choices. Past performance is not a guide to future performance.}

TOP AI STOCKS PERFORMANCE

TOP AI ETFs PERFORMANCE

AI STOCKS IDEAS 

Looking for the Next Palantir Stock? - The Globe and Mail

Baidu vs Alibaba: Which Chinese AI Stock is the Better Investment? - TradingView

Meet the Monster Quantum Computing Stock- Yahoo Finance

AI STOCKS & ETFs NEWS 

Warren Buffett's AI Investment Strategy - The Motely Fool - Warren Buffett has significantly invested in AI, with 26% of his portfolio in two key AI stocks, focusing on companies that leverage AI for efficiency and customer experience.

Salesforce's Acquisition of Informatica: Doubling Down on Data for an Agentic AI Future - ARC Advisory - Salesforce's $8 billion acquisition of Informatica emphasises the importance of data in enhancing AI capabilities, positioning integrated data management as vital for successful Agentic AI deployments. 

Global Uncertainty Exceptionally High as Chief Economists Concerned about Trade Shocks and AI Disruption - Economy -  Chief economists express deep concern over heightened global economic uncertainty driven by trade shocks and AI disruptions.

AI STARTUPS

How the Founders of Tomorrow are Using AI Agents Today to Prepare for Capital raising - SmartCompany - Startups are adopting an AI-first approach to improve operational efficiency and attract investors, utilising AI agents to innovate and streamline processes essential for capital raising.

The 2025 Midas Seed List: Meet The Visionary Investors Powering The Next Wave Of AI - Forbes - A focus on visionary investors shaping the AI landscape by backing early-stage startups, identifying trends, and fostering growth in innovative technologies.

Cathay Innovation Closes EU's Largest AI-Dedicated Fund at $1B - TechinAsia - The fund will focus on consumer, healthcare, financial services, and energy and aims to connect startups with strategic partners globally.

AI TRENDS

7 AI Cybersecurity Trends - Exploding Trends - The article explores trends in AI-driven cyber threats and defences, highlighting the rise of AI-enhanced malware and phishing attacks.

How to Align Your Content Strategy with AI Search Trends in 2025 - DesignRush - AI is shifting search dynamics, requiring brands to adopt clear, structured content that AI can interpret.

OTHER

AI Won't Make us Lazy, It'll Make us Smarter, Demis Hassabis, Google Deepmind CEO - IndianExpress - He argues that AI will enhance human capabilities and create new job opportunities while revolutionising education.

7 New Google AI Tools you Should Know - CyberGuy - Google I/O 2025 revealed advancements in AI tools, including AI Mode, AI Overviews, and the Gemini model, aimed at enhancing user experience and integration across platforms.

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_{Disclaimer - The information contained on this newsletter does not constitute investment advice or a personal recommendation, nor is it an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investments, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all. The information presented is based on publicly available data and sources believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Market conditions can change rapidly, and the information provided may no longer be up to date. This content is for informational purposes only and should not be construed as financial, legal, or tax advice. Data sources: S&P Global Market Intelligence}