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Global technology stocks advanced on Thursday after Nvidia reported better than expected chip sales, reassuring investors on artificial intelligence demand amid growing concerns of a bubble.
US stock futures pointed to a rally when Wall Street opens. Contracts tracking the tech-heavy Nasdaq 100 were up 1.4 per cent, while those for the S&P 500 gained 1 per cent. Nvidia’s share price was up 4.7 per cent in pre-market trading.
Nvidia’s results — seen as a test of investor sentiment in the AI sector because its chips power large language models such as OpenAI’s ChatGPT — steadied the tech sector after a sell-off in recent weeks that came as investors grew wary of valuations and huge capital expenditure on chips and data centres.
“It’s fair to say that Nvidia’s results have completely changed the market mood and pushed out any bubble fears for another day,” Jim Reid, Deutsche Bank’s head of global macro research, wrote in a note on Thursday morning.
Asian and European markets also rose, with Japan’s Nikkei 225 index up 2.7 per cent, driven by technology groups tied to AI such as investor SoftBank and semiconductor equipment maker Advantest. South Korea’s Kospi rose 3 per cent, led by Nvidia suppliers Samsung and SK Hynix.
The Stoxx Europe 600 was up 0.7 per cent in morning trading, with a sub-index tracking tech stocks up 0.9 per cent. Dutch chipmaker ASML rose 1.7 per cent.
“We think fears of an imminent burst of the AI boom should fade now,” said Max Kettner, head of multi-asset strategy at HSBC, adding that the tax incentives in Donald Trump’s “big, beautiful bill” would probably introduce “another wave of upside risks for the coming quarters”.
Nvidia’s revenues increased 62 per cent year on year to $57bn in the three months to the end of October, beating consensus estimates of $55bn, compiled by Visible Alpha.
“There has been a lot of talk about an AI bubble. From our vantage point we see something very different,” Nvidia chief executive Jensen Huang told analysts on Wednesday, shrugging off concerns that the AI spending spree was tailing off.
“Nvidia earnings yesterday [have] helped settle nerves in risk assets,” said Mitul Kotecha, head of emerging markets macro strategy at Barclays.
Bitcoin also rebounded, rising 1.8 per cent to $92,200. The digital asset had fallen more than 28 per cent in the past six weeks amid concerns over tech valuations and declining confidence in further interest rate cuts by the US Federal Reserve.
Minutes from the latest Fed meeting indicate deep divisions between inflation hawks and doves on the need for another interest rate cut this year, with Fed chair Jay Powell warning that the next decision was not a “foregone conclusion”.
“We’ve had a lack of US data and that has meant markets have been scratching around for an underlying picture of the US economy,” said Kotecha. “I’m not sure [Nvidia results] turns things around, or that the underlying concerns have disappeared.”
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