Following NVIDIA's earnings report, the investment thesis behind artificial intelligence has received another powerful vote of confidence.

According to trading desk insights, Goldman Sachs' FICC and equities trader Rich Privorotsky noted in his August 27th market briefing that a convergence of positive factors—ranging from surging B2B revenue at Chinese AI firms and NVIDIA's optimistic growth outlook, to incremental improvements in the Strait of Hormuz situation and a muted Jackson Hole meeting—has left market risk appetite in a "fairly reasonable" position.

NVIDIA quickly validated this assessment with its subsequent price action. On Thursday, NVIDIA shares skyrocketed 8.7%, marking their largest single-day gain since April 2025 and boosting market capitalization by $442 billion in a single session, second only to Microsoft's record $450 billion increase in July.

In Privorotsky's view, the most noteworthy signal of the week may not have been NVIDIA itself, but rather the structural shift in Chinese AI demand—falling inference costs have not suppressed computing power needs; instead, they are unlocking significantly larger-scale practical usage. Concurrently, diplomatic progress in the Strait of Hormuz and the dovish undertone from Jackson Hole have together created a macro backdrop that allows markets to continue grinding higher.

China's AI Surge: Enterprise Revenue Explodes, Inference Demand Exceeds Expectations

Privorotsky highlighted the latest financial data from Chinese AI companies as one of the most insightful signals of this earnings season.

MiniMax reported first-half revenue growth of 283% year-over-year to $116.6 million, but the more critical shift lies in its revenue composition: enterprise/API revenue surged 703% year-over-year, now representing 63% of total revenue. Token consumption in July was 20 times that of January, with annualized recurring revenue reportedly exceeding $800 million by August, approximately 80% of which comes from B2B operations.

SenseTime is following a similar trajectory: total revenue grew 23% year-over-year, while generative AI revenue rose 28%, nearing 80% of total group revenue. Recurring revenue expanded 124%, accompanied by continued gross margin improvement.

Meanwhile, Zhipu AI has officially confirmed that its mysterious model "Ox Alpha" is GLM-5.3-Flash, which has claimed the top spot in online usage rankings. Its pricing—$0.15 per million input tokens and $0.50 per million output tokens for multimodal reasoning and agent tasks—places it alongside DeepSeek, collectively driving the adoption of ultra-low-cost, high-efficiency models.

Privorotsky's core assessment is that Chinese AI demand is real and increasingly manifesting in production-grade workloads, not just model announcements. "Falling inference costs haven't killed compute demand; instead, they're unlocking substantially higher usage volumes. This is crucial for the hardware debate."

NVIDIA: No Black Swans in Results, Impressive Scale of Financing Ecosystem

NVIDIA's second-quarter revenue grew 106% year-over-year, with data center business up 117%. Third-quarter revenue guidance exceeded market expectations, and management projects approximately 70% revenue growth for fiscal year 2028. Margins came in slightly below what some investors anticipated, but Privorotsky sees no material negatives.

The price action corroborates this view—shares dipped during the earnings call before sharply reversing higher, ultimately closing up 8.7% on the day.

Privorotsky paid special attention to the financing structure NVIDIA has built around its ecosystem: the company disclosed a third-party financing platform exceeding $500 billion, leveraged through private credit partners, with residual value support covering up to 25% of individual opportunities. Total future commitments currently stand at approximately $366 billion, alongside additional guarantee structures tied to customer infrastructure.

"What's impressive is that they put all of this on the table and the stock didn't close lower. I think that transparency actually served as a positive."

Software Sector: Salesforce Demonstrates AI Can Be Monetized, Not Just Disruptive

Privorotsky believes the software sector is undergoing reinvention rather than demise. Salesforce surged approximately 12% to 14% after hours, with second-quarter cRPO growing 14% on a constant-currency basis and revenue up 11%. Margins and cash generation were both robust, prompting management to raise its full-year outlook.

He pointed out that the original bear thesis for software was that AI would commoditize the application layer and destroy pricing power. Salesforce is demonstrating an alternative path—"incumbent software vendors leveraging their proprietary data, workflows, and distribution channels to embed AI and reprice their existing customer base."

"There's still much to prove, but this is the kind of report that can start repairing software valuation multiples." He also cautioned that Salesforce's earnings per share benefited from non-operating gains on private investments, which should be distinguished from core performance.

Strait of Hormuz: Limited Diplomatic Progress, Oil Prices and European Gas Remain Key Variables

Qatar's Prime Minister is traveling to Tehran to mediate, while Iran and Oman continue negotiations on a framework for managing maritime navigation in the Strait of Hormuz. Iran's Revolutionary Guard claims an agreement has been reached on control and revenue sharing, but other Iranian sources indicate talks have not yet concluded.

Privorotsky remains cautious: "I'm not declaring victory." He believes some form of joint maritime responsibility arrangement is currently the most viable option, though it still leaves Iran room to tighten the strait again should relations deteriorate.

From a market perspective, a significant execution gap persists—only five commercial vessels transited the strait on Tuesday, compared to a 10-day average of fifteen. He specifically noted that while crude prices have pulled back, European natural gas prices remain elevated and warrant continued monitoring.

Jackson Hole and Inflation: Known Unknowns, No Need for Excessive Concern

Core PCE rose 0.2455% month-over-month in July, slightly above Goldman Sachs Economic Research's expectations, but the overshoot was driven primarily by airfare and healthcare components, plus portfolio management fees inflated by lagged Q2 stock price effects—which GIR expects to be substantially revised once the Bureau of Economic Analysis updates its methodology next month. Privorotsky's take: "Not perfect data, but clearly not the start of a new inflationary impulse."

Regarding Jackson Hole, GIR expects Fed Chair Warsh's Friday remarks to avoid strong signals about the September FOMC meeting, potentially acknowledging recent inflation improvements, reaffirming the 2% target, and discussing macro topics like productivity and global shocks, without offering explicit policy guidance. GIR's interpretation is that favorable June and July inflation data strengthens the case for holding rates steady.

Privorotsky's attitude is relaxed: "Sounds neutral to dovish—what exactly are we worried about?" His base case is that Jackson Hole will be "a nudge, and nothing happens."

Overall Risk Assessment: Grinding Higher, with Oil and NVIDIA as Key Drivers

Synthesizing all factors, Privorotsky's overall assessment is: if by week's end NVIDIA's demand outlook remains robust, Chinese AI inference demand continues to surge, Salesforce proves software can monetize AI, July PCE shows no surprises, the Fed shows no inclination to curb growth, and Hormuz keeps improving—"this feels like a fairly reasonable outcome."

He also noted that the UK bank holiday on Monday, followed by the natural transition toward Labor Day, means that in the absence of new information, market preference remains to "keep grinding higher."

On key variables, he flagged oil price developments, NVIDIA's daily price action and whether the semiconductor sector can follow through, and the MSCI month-end rebalancing (theoretically supportive of momentum and risk assets) as key indicators to watch.

"There's a lot to worry about, but Jackson Hole increasingly looks like another 'known unknown' we simply flip the page on."