ORLANDO, Florida, Nov 20 (Reuters) - Nvidia ( NVDA ) once again

delivered a resounding earnings 'beat' on Wednesday, which may

initially dampen some of the smoldering tech bubble fears. But,

paradoxically, the $5 trillion company's latest figures actually

highlight many of the AI concerns that have been roiling markets

recently.

On the surface, the headline numbers are astonishing. The

chipmaker's revenue in the third quarter was a record $57

billion, up 62% from a year earlier, and net profit rose 65% on

the year to a record $32 billion.

Nvidia's ( NVDA ) forecasts are even more bullish, with revenue

expected to rise to $65 billion in the fourth quarter, higher

than analysts' average estimate of around $62 billion. Figures

like that suggest the global artificial intelligence leader's

cash-generating powers are as strong as ever.

Nvidia's ( NVDA ) shares jumped 5% in extended trading after the

market close on Wednesday, adding around $225 billion to the

firm's market cap in a matter of minutes.

"Blackwell sales are off the charts, and cloud GPUs are sold

out," CEO Jensen Huang said, referring to two types of Nvidia ( NVDA )

chips. "AI is going everywhere, doing everything, all at once."

That's pretty exuberant language for a press release. And

considering the growing fears about AI capex indigestion, it may

be bordering on irrationally exuberant.

TOO MUCH INVESTMENT?

The key issue is simple: the tens of billions of dollars of

revenues Nvidia ( NVDA ) is raking in every quarter are tens of billions

of dollars its customers are spending, with little indication of

when - if ever - all this investment will be profitable.

Huang repeated on Wednesday that Nvidia ( NVDA ) has $500 billion in

bookings for its advanced chips through 2026. That's half a

trillion dollars of AI hardware investment.

What's more, four customers accounted for 61%

of Nvidia's ( NVDA ) sales in the third quarter, up from 56% in the

second. That suggests increased concentration risk for Nvidia ( NVDA ) as

well as the chip buyers.

These are big bets. The eventual productivity gains may be

enough to make the outlay worth it. But we won't know for a

while, and the bigger the spend, the higher that bar for

profitability and the greater the risk that investors will grow

impatient.

Indeed, their patience already appears to be wearing thin.

Bank of America's November fund manager survey shows respondents

overwhelmingly believe the most crowded trade right now is

'long' Magnificent Seven shares, and the biggest tail risk is an

AI bubble.

FUND MANAGERS UNITE ON AI RISK

Were Nvidia's ( NVDA ) results strong enough to sustain its initial

5% share price spike and stifle concerns about its customers'

ability to continue pouring billions into AI?

Looking at the past seven quarterly earnings reports, the

average Nvidia ( NVDA ) share price move in the two days following the

release has been a rise of 1.8%. Momentum is waning though. The

biggest increase - a whopping 16% - was in February last year,

and the average two-day move following the three releases this

year has been a decline of almost 3%.

Of course, those declines pale in comparison to the shares'

stratospheric rise. Nvidia ( NVDA ) became a $4 trillion company in July,

only to see its market cap jump another trillion dollars in a

mere three months.

But some high-profile shareholders have cashed out recently,

with Japan's SoftBank and tech billionaire Peter Thiel's hedge

fund ditching their Nvidia ( NVDA ) stakes during the third quarter. And

the chipmaker's shares have slid more than 10% since peaking on

October 29, helping to take some of the fizz out of the wider

tech boom.

Will Nvidia's ( NVDA ) latest results spark a sustainable 'buy the

dip' rebound, or deepen those bubble concerns? We'll soon find

out.

(The opinions expressed here are those of the author, a

columnist for Reuters)

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(Editing by Andrew Heavens)