By Purvi Agarwal and Niket Nishant
Aug 27 (Reuters) – Futures tied to the tech-heavy Nasdaq-100 index outpaced peers on Thursday after Nvidia’s blockbuster forecast renewed investor confidence in the AI trade and boosted technology stocks.
Nvidia shares rose 7.2% in premarket trading, after the chip giant’s robust forecast illustrated relentless demand for AI computing, even as it warned that shortages of memory components could curb the pace of the industry’s growth.
The report met investors’ high expectations and bolstered the view that the tech rally is far from over, with companies at the heart of AI buildout continuing to post strong growth.
“The biggest positive was management effectively telling investors that AI demand remains supply-constrained… That is a powerful counter to the narrative that the AI capex cycle is already peaking,” said Charu Chanana, chief investment strategist at Saxo Markets.
She, however, warned against excessive optimism and said investors could be more selective going forward.
“Nvidia’s results validate the AI infrastructure trade, but they are not a signal to indiscriminately chase everything labeled AI.”
Global tech stocks saw renewed investor interest, with South Korea’s KOSPI closing 1.5% higher. U.S. chipmakers such as Micron Technology, Marvell Technology and Broadcom added 4.1%, 4.7% and 1.7%, respectively.
Data storage firms Sandisk and Western Digital gained 4.5% and 3.9%, respectively.
Salesforce jumped 11.6% after raising annual revenue and profit forecasts, and rolling out a new plug-in combining its capabilities with Anthropic’s Claude AI models.
CrowdStrike climbed 9.5% after the cybersecurity software provider raised its annual revenue forecast and topped second-quarter earnings estimate.
Both these reports calmed worries that advanced AI tools could upend the traditional software industry, boosting investor appetite for beaten-down software stocks and narrowing the gap with semiconductors, which are seen as the primary beneficiaries of the AI boom.
Other software firms such as ServiceNow and Oracle added more than 2% each.
At 06:51 a.m. ET, Dow E-minis were down 43 points, or 0.08%, S&P 500 E-minis rose 30.5 points, or 0.4%, and Nasdaq-100 E-minis gained 284.25 points, or 0.97%.
FOCUS SHIFTS BACK TO MACRO
With Nvidia results out, investor attention turns to Federal Reserve Chair Kevin Warsh’s first Jackson Hole address on Friday.
Warsh’s speech, which will wrap up a busy week, is likely to be parsed for hints on the central bank’s stance on the latest inflation data and the U.S. Treasury’s efforts to tame yields.
“We believe investors want Warsh to define the key thresholds and datasets that would move him and the committee off a (rate) hold,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial.
“Notably, investors want more clarification on whether he’s still drawing a hard line on the 2% inflation target.”
The Fed has a target of maintaining an annual inflation rate of 2%. On Wednesday, the Personal Consumption Expenditures data came in slightly hotter than expected, complicating the policy outlook after a benign consumer inflation report earlier this month.
A weekly reading of jobless claims is also due before markets open on Thursday.
(Reporting by Purvi Agarwal and Niket Nishant in Bengaluru; Editing by Shilpi Majumdar)
Comments