Nvidia (NVDA) reported second-quarter earnings after the closing bell on Wednesday, beating expectations on both the top and bottom lines but still disappointing investors. Is this a sign that investor enthusiasm is waning, or is this a minor blip on the way to a new all-time high?

Andrew Chang, Chief Technology Officer at S&P Global Ratings, joins Catalysts to provide insight into Nvidia’s recent earnings report and the current enthusiasm for the AI ​​sector among investors.

For his opinion on Nvidia, Chang explained its AA- credit rating: “The credit rating is AA- with a stable outlook. We upgraded the company in April. And to make it clear, Nvidia is the highest-rated semiconductor company in the world, together with TSMC (TSM)… and Samsung Electronics (005930.KS) in Korea. So the highest rating from the semi perspective. We are very pleased with the company’s technical lead and strong product execution so far.”

Chang outlines what could be a risk from a credit perspective: “The possibility of short-term demand volatility despite the huge long-term growth potential. So it’s not going to be up and to the right every quarter. Hyperscalers, as you said, can’t spend fast enough. But if the ROI on their investments isn’t up to par, you could easily see Amazon and Microsoft pause purchases for multiple quarters. They’ve done that before with general servers, so they could clearly do that with AI servers.”

He continues: “And when that day comes… I can see a scenario where hyperscale spending slows significantly and that could cause panic among investors. But we have to remember that this is a long-term growth story, that we can’t be so fixated on short-term fluctuations.”

Click here to watch the full episode of Catalysts for more expert insights and the latest market activity.

This post was written by Nicholas Jacobino