Global tech stocks rallied on Thursday as investors flocked to AI stocks. Nvidia income.
Nvidia reported better-than-expected fourth-quarter revenue guidance, with revenue up 62% year over year to $57.01 billion, giving investors confidence to keep betting on the AI industry. Shares rose 5% in premarket trading.
In Europe, Dutch semiconductor companies BESI and ASMI rose more than 3% and 2%, respectively, in the first hour of trading. ASML, which makes critical equipment for semiconductors, rose 2.1%.
Asian-listed stocks Samsung Electronics and Hon Hai Precision Industries, also known as Foxconn, rose 3.5% and 3.3%, respectively.
In the U.S., investors flocked to tech stocks in pre-market trading. AMD 5% increase, arm rose nearly 4%, micron technology Advanced 2.7%; marvel technology 3.3% addition, broadcom It was last seen rising 3.1%; intel It increased by 2%.
“Amazing growth”
Dan Hanbury, global equity portfolio manager at Ninety-One, which makes Nvidia its second-largest holding in the Global Strategic Equity Fund, cautiously welcomed the rise in Nvidia’s stock price in pre-market trading Thursday.
“As a carrier, it’s nice to see a positive test early, but of course we know that that response could reverse over time,” Hanbury said on CNBC’s “Squawk Box Europe.”
“Our reading of the numbers is that they are very strong. Obviously, you can get caught up in the quarterly noise of a company like this, but when you put them (numbers) into context…just three years ago, the company was generating $15 billion in revenue in data centers, and now the consensus forecast for next year is looking at $280 billion,” Hanbury said. “This is incredible growth that they’re bringing.”
Karen McCormick, chief investment officer at London-based venture capital firm Beringia, spoke on CNBC’s “Squawk Box Europe” specifically about Nvidia and subsequent recent moves in AI and scale-up. microsoftrecently sought to invest up to $15 billion in OpenAI rival Anthropic.
“It’s always a little awkward to go against Jensen Hwang so soon after he’s done such incredible work, but the near-incestuous relationship between Valley and AI companies is more than we’ve seen so far,” McCormick said.
“So, traditionally speaking, we might have called something like this vendor financing where the vendor helps support the business,” McCormick said. “In this case, we’re just doing it with hundreds of billions of dollars, and the ecosystem itself is so intertwined right now that it’s a little nerve-wracking because if we’re in a bubble and that bubble bursts, what happens to all the businesses involved?”
“There has never been a worse situation than in 1999.”
Cyclical trading, bond issuance and high valuations culminated in pressure on the market ahead of Nvidia’s long-awaited earnings report, even as other Big Tech companies reported strong quarterly profits.
“The flip side of that is that each of these companies has incredibly strong balance sheets and incredibly strong investors, so they’re not going to fail either way,” McCormick said.
Ben Ballinger, global head of technology research and investment strategist at Quilter Cheviot, added that Nvidia’s valuation is not “particularly excessive.”
He told CNBC’s “Early Edition of Europe” on Thursday that when you look at the core big tech companies, valuations aren’t as dire.
It’s also on the periphery in terms of debt, he said. meanwhile meta and Amazon Ballinger added that despite raising debt, “we still have net cash.”
“Rather, I think it’s important that they’re managing their financial position and managing their balance sheet, so to speak. Certainly, it’s not great that they’re doing some of this capital investment out of debt, but it’s not as bad as it was in 1999 when very heavily leveraged carriers were doing a lot of this capital investment.”
But Gil Luria, head of technology research at DA Davidson, told CNBC on Thursday that NVIDIA is not a bubble barometer. “There are concerns that companies are raising large amounts of debt to build data centers,” he said.
“(NVIDIA’s earnings) certainly put any concerns about NVIDIA to rest, but that doesn’t mean we don’t need to be on the lookout for companies we rent from to build data centers,” Luria added.
— CNBC’s Sam Meredith contributed to this report
