Dan Gallagher

Hey, listeners, it's Friday, May 22nd.

I'm Dan Gallagher for The Wall Street Journal, and this is What's News in Earnings, a look at some of the biggest themes standing out in this earnings season.

Chip companies make up about a fifth of the market cap of the S&P 500, and the industry's dominance is only growing.

A rise in what's known as artificial intelligence agents is fueling even more demand for those chips.

Nvidia is the largest player in AI chips by far, and its latest quarter showed blistering growth in sales and profits, and those results beat Wall Street's expectations.

But other companies are now coming for a piece of NVIDIA's business.

That includes the newly public Cerebrus, whose hot IPOs set the stage for other AI debuts expected later this year.

And it includes tech giants like Google and Amazon, who are now making their own AI chips and starting to consider how to sell those to other companies.

Joining me to break down NVIDIA's results and what they mean for the AI industry is tech reporter Robbie Whelan.

So Robbie, NVIDIA's numbers were predictably huge.

CEO Jensen Wang said on the company's earnings call that demand has gone, quote, parabolic.

A genetic AI has arrived.

But NVIDIA's stock fell afterwards.

Robbie, why is that so predictable?

And what was the biggest surprise in the report?

For the financial guy that I am, I also look at like Nvidia's huge profit margins that have gone up in this AI world.

And there's this old saying that your margin is my opportunity.

There's a lot of these competitors that are saying, oh, you know, I could get some of that.

and undersell NVIDIA, and that's also a risk for them, right?

There seems to be a lot of concern among investors about can they maintain the margins that they've been maintaining, you know, like 70-plus percent gross profit margins.