Global tech stocks rallied Thursday as investors piled back into AI-related names, buoyed by Nvidia earnings.
Nvidia topped forecasts for revenue, which jumped 62% to $57.01 billion year-on-year, and issued stronger-than-expected fourth-quarter sales guidance, giving investors the arrogance they were on the lookout for to proceed placing bets on the AI industry. Shares were 5% higher in premarket trade.
In Europe, Dutch semiconductor firms BESI and ASMI moved up over 3% and a pair of% in the primary hours of trading, respectively. ASML, which makes critical equipment for semiconductors, gained 2.1%.
Asia-listed stocks Samsung Electronics and Hon Hai Precision Industry, also often known as Foxconn, climbed 3.5% and three.3% higher, respectively.
Stateside, investors flocked to tech stocks in premarket trade: AMD rose 5%, Arm gained almost 4%, Micron Technology advanced 2.7%, Marvell Technology added 3.3%, Broadcom was last seen 3.1% up and Intel moved 2% higher.
‘Phenomenal growth’
Dan Hanbury, global equity portfolio manager at Ninety One, which holds Nvidia as its second-largest holding in its global strategic equity fund, cautiously welcomed Nvidia’s share price jump in Thursday’s premarket trade.
“As a holder, it’s great to see an early positive response but after all as we all know those reactions can reverse further into the day,” Hanbury told CNBC’s “Squawk Box Europe.”
“Our reading of the numbers is that they are very strong. Clearly, we will get caught up within the quarterly noise of an organization like this but when we just put those [numbers] in context … only three years ago they were delivering $15 billion of information center revenue, we’re now taking a look at consensus forecasts into next yr of $280 billion,” Hanbury said. “That’s phenomenal growth that these guys are delivering.”
Karen McCormick, chief investment officer at London-based enterprise capital company Beringea, spoke with CNBC’s “Squawk Box Europe” about a few of the recent moves to bulk-up on AI and scale, particularly following Nvidia and Microsoft‘s recent push to take a position as much as $15 billion in OpenAI rival Anthropic.
“It is usually a bit bit intimidating to contradict Jensen Huang right after he has made phenomenal earnings results but by way of the just about incestuousness of the valley and the AI corporations, it’s greater than we now have seen up to now,” McCormick said.
“I mean, in case you take into consideration traditionally, we may need called something like this vendor financing, where your vendor helps to support the business,” McCormick said. “On this case we are only doing it with a whole bunch of billions of dollars and the ecosystem itself is now so intertwined that it’s almost a bit bit nerve-wracking because if we’re in a bubble and if any of that bubble bursts, what will occur to the entire related businesses?”
‘Nowhere near as bad as 1999’
“The flip side to that’s that every of them has incredibly robust balance sheets and incredibly robust investors, who may not allow them to fail either way,” McCormick said.
Quilter Cheviot’s global head of technology research and investment strategist Ben Barringer, added that Nvidia’s valuation is not “particularly excessive.”
Valuations aren’t that streteched if you take a look at the core big tech corporations, he told CNBC’s “Europe Early Edition” on Thursday.
By way of debt that is also on the peripheral, he said. While Meta and Amazon have raised debt, “they’re still net money positioned,” Barringer added.
“I feel it’s more about them managing their treasury position and managing their balance sheet, because it were. Yes, it isn’t great that they’re performing some of this capex from debt, nevertheless it’s nowhere near as bad as 1999 where these were very heavily levered telecom corporations doing loads of this capex.”
Nevertheless, Gil Luria, head of technology research at D.A. Davidson, told CNBC on Thursday that Nvidia will not be a bubble barometer. “The priority is about corporations raising loads of debt to construct data centers,” he said.
“Any concerns about Nvidia were actually laid to rest [with Nvidia’s earnings], but that doesn’t suggest that we need not keep watch over corporations lending or borrowing to construct data centers,” Luria added.
— CNBC’S Sam Meredith contributed to this report
