Discussion on "China's Explosive B-End AI Revenue, NVIDIA Still 'Monopolizes', Hormuz and Jackson Hole," Goldman Sachs Trader: Everything Seems Fine

After Nvidia's earnings season, the AI investment thesis has once again received strong validation.

According to Chasing Wind Trading Desk, Rich Privorotsky, a FICC and equities trader at Goldman Sachs, indicated in a market briefing on the 27th that from the surge in B-end revenues of Chinese AI companies, to Nvidia’s optimistic guidance for future growth, to the marginal improvement in the Strait of Hormuz situation and the dovish expectations for the Jackson Hole Conference, multiple favorable factors are overlapping, placing overall market risk appetite in a “fairly reasonable” position.

Nvidia subsequently confirmed this judgment with action. On Thursday, Nvidia's stock soared 8.7% in a single day, marking the largest single-day increase since April 2025, with a one-day market cap spike of $442 billion, second only to the $450 billion record set by Microsoft in July this year.

In Privorotsky’s view, the most noteworthy signal this week may not be Nvidia itself, but the structural change in Chinese AI demand—the reduction in inference costs has not suppressed computing power demand but is instead unlocking much larger-scale real usage. Meanwhile, diplomatic progress in the Strait of Hormuz and the dovish tone of the Jackson Hole Conference jointly form a macro backdrop that allows the market to “continue grinding higher.”

China AI: B-end Revenue Explosion, Inference Demand Far Exceeds Expectations

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

MiniMax's revenue increased by 283% year-on-year in the first half to $116.6 million, but even more critical is the shift in revenue structure: enterprise/API revenue soared 703% YoY, accounting for 63% of total revenue. July’s token consumption was 20 times that of January, and the annualized recurring revenue (ARR) in August reportedly exceeded $800 million, with about 80% coming from B2B business.

SenseTime shows a similar growth trajectory: total revenue grew by 23% YoY, generative AI revenue grew by 28%, accounting for nearly 80% of group revenue, recurring revenue growing by 124%, with gross margins continually expanding.

Meanwhile, Zhipu AI officially confirmed its mysterious model “Ox Alpha”—that is, GLM-5.3-Flash, which has topped the online usage rankings. Its pricing is $0.15 per million input tokens and $0.50 per million output tokens for multimodal inference and agent tasks—on par with DeepSeek—jointly driving the proliferation of ultra-low-cost, high-efficiency models.

Privorotsky’s core judgment: China’s AI demand is real and increasingly reflected in production-grade workloads, rather than just at the model publishing stage. “The decline in inference costs has not killed demand for computing power, but is in fact unlocking sharply higher usage. This is critical to the hardware-level debate.”

Nvidia: No 'Black Swan' in Performance, Financing Ecosystem Scale Is Impressive

Nvidia’s second quarter revenue grew by 106% YoY, data center business grew by 117%, and Q3 revenue guidance was higher than market expectations, with management forecasting FY28 revenue growth around 70%. Profit margin came in slightly below some investors’ expectations, but Privorotsky sees no substantive downside factors.

The share price action validated this view—during the earnings call, the share price initially fell, then reversed sharply higher, ending the day with an 8.7% gain.

Privorotsky particularly focused on Nvidia’s ecosystem-based financing structure: 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 deal opportunities; future commitments currently total about $366 billion; there are also additional guarantee structures around customer infrastructure.

“What’s impressive is they put all this on the table, and the share price didn’t close lower. I think this kind of transparency actually had a positive effect.”

Software: Salesforce Proves AI Drives Monetization, Not Just “Scorched Earth”

Privorotsky believes the software sector is undergoing self-reinvention, not extinction. Salesforce shares rose about 12% to 14% after hours, with Q2 cRPO (current remaining performance obligation) up 14% at constant currency, revenue growing by 11%, margins and cash generation both strong, and management raising its full-year outlook.

He pointed out, the original short thesis for software was: AI will commoditize the application layer and destroy pricing power. Salesforce is showing another possibility—“existing software vendors leveraging proprietary data, workflows, and distribution channels to embed AI and reprice existing customer bases.”

“A lot still needs to be proven, but this is precisely the kind of earnings report that can begin to repair software multiples.” He also noted that Salesforce’s per-share earnings benefited from non-operating gains from private equity investments, which should be distinguished.

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

The Qatari Prime Minister is heading to Tehran to mediate, while Iran and Oman continue talks about a framework for navigation management in the Strait of Hormuz. The IRGC claims an agreement on control and revenue sharing has been reached, but other Iranian sources say negotiations are not yet finalized.

Privorotsky remains cautious: “I’m not declaring victory.” He believes some form of joint maritime responsibility arrangement is the closest to a feasible option right now, but it also allows Iran to retain the flexibility to tighten control if relations worsen in the future.

From a market perspective, there’s still a clear gap at the operational level—on Tuesday only five commodity ships passed through the Strait, compared with the 10-day average of 15 vessels. He particularly noted that, although oil prices have retreated, European natural gas prices remain high and warrant continued attention.

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

July core PCE rose 0.2455% MoM, slightly higher than Goldman Sachs GIR’s forecast, but the excess mainly came from air transportation and healthcare subcategories, and from portfolio management fees inflated by Q2 equity lag effects—GIR expects the latter to be substantially revised after BEA updates its methodology next month. Privorotsky’s assessment: “It’s not perfect data, but it’s clearly not the start of a new inflation impulse.”

On Jackson Hole, GIR expects Fed Chairman Powell’s speech on Friday will not send strong signals about the September FOMC, may acknowledge recent inflation improvement, reiterate the 2% target, and discuss macro topics like productivity and global shocks, but will not provide explicit policy guidance. GIR interprets the better June and July inflation data as reinforcing the case for holding rates steady.

Privorotsky takes a fairly relaxed stance: “Sounds neutral to dovish—what exactly are we worried about?” His base case: Jackson Hole will be “a nudge, and nothing happens.”

Overall Risk Assessment: Grinding Upward; Oil Prices and Nvidia Are Key

Taking all these factors together, Privorotsky’s overall view is: If by the end of this week, Nvidia demand outlook remains strong, Chinese AI inference demand continues to explode, Salesforce proves software can monetize AI, July PCE has no surprises, the Fed shows no intent to stifle growth, and the Strait of Hormuz keeps improving—“this feels like a pretty reasonable outcome.”

He also noted that with the UK bank holiday on Monday and the natural transition toward Labor Day, in the absence of new information, market preference remains “to continue grinding higher.”

As for key variables, he cited oil price directions, Nvidia’s daily price action and whether the semiconductor sector will follow, along with the MSCI month-end rebalancing (which should theoretically support momentum and risk assets), as the main indicators to watch.

“There’s a lot to worry about, but Jackson Hole increasingly looks like another ‘known unknown’ we just need to turn the page on.”