Introduction: Nvidia achieves record quarter driven by AI chip demand
Good morning, and welcome to our continuous coverage of business, financial markets, and the global economy.
A renewed wave of optimism surrounding artificial intelligence has boosted the stock market following chip designer Nvidia's report of another record-breaking earnings performance last night.
The company, known for designing chips essential to AI technology, announced an 85% year-on-year increase in revenue, reaching $81.6 billion for the quarter ending in April. This marks Nvidia's 15th consecutive quarter of exceeding Wall Street expectations.
Nvidia projected sales of $91 billion for the current quarter, surpassing the average investor forecast of $86 billion, though falling short of the highest estimates. Despite this, its shares declined by 1% in after-hours trading, reflecting some investor concerns about the sustainability of the company's rapid growth.
Nonetheless, the strong revenue results have positively influenced Asian stock markets: South Korea's Kospi index surged by 9%, while Taiwanese shares rose 3.3%, ending a four-day decline. LG Electronics and Hyundai Mobis both experienced gains exceeding 20% following comments from Nvidia CEO Jensen Huang, who identified physical AI and robotics as the "second category" for significant growth.
UK political developments and tax proposals
In other news this morning, Wes Streeting, the former health secretary, has advocated for a "wealth tax that works."
Speaking to the BBC, Streeting proposed aligning capital gains tax (CGT) rates with income tax rates, which he estimated could generate £12 billion annually.
He suggested that CGT rates should correspond to the three income tax bands of 20%, 40%, and 45%, depending on the taxpayer's income level. On the BBC's Political Thinking podcast, he emphasized the need to close loopholes that allow individuals to reclassify income from work as capital gains. Additionally, he proposed offering reduced CGT rates to entrepreneurs who are actively building companies.
These remarks come shortly after his resignation as health secretary last week, following calls from several Labour MPs for Prime Minister Keir Starmer to step down.
The agenda
11:30am BST: UK Chancellor Rachel Reeves is expected to present measures supporting cost of living relief.
3:00pm BST: Eurozone consumer confidence data will be released.
4:00pm BST: Bank of England Governor Andrew Bailey will deliver a speech at Cutler’s Feast in Sheffield.
Closer to home, UK Chancellor Rachel Reeves is scheduled to address Parliament this morning to outline her latest plans aimed at mitigating the impact of anticipated inflation increases later this year.
This follows Prime Minister Keir Starmer's announcement of tax cuts planned for September and December, including free vehicle tax for lorry drivers.
Concerns about inflation are being exacerbated by the ongoing conflict in the Middle East, which has caused a rise in oil prices. Brent crude, the international benchmark for oil, increased by 1.5% this morning to $106.61 per barrel.
SpaceX announces plans for public listing
In technology news, SpaceX revealed last night its intention to go public on the US stock market.
Elon Musk's aerospace and satellite company plans to list on the Nasdaq exchange under the ticker symbol SPCX, with an estimated valuation of approximately $1.75 trillion. The initial public offering is expected around 12 June, seeking to raise up to $80 billion in investment.
"Our mission is to build the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe, and to extend the light of consciousness to the stars."
