That the company would produce another set of blockbuster results was never in question. However, the additional surprise was its assertion that it would see revenue growth of 70% in 2028, far higher than the 44% analysts were expecting, and further proof that the AI trade is far from exhausted. Indeed, the relief which Nvidia provided came with the suggestion that the AI build-out remains in its early stages where supply simply cannot keep up with demand.
As Nvidia shares rose by almost 9% in reaction, the renewed enthusiasm spilled over into gains of 4.5% for Broadcom, 4% for Intel and 2% for SK Hynix, with the VanEck Semiconductor ETF ahead by 3% as concerns over whether the return on the extraordinary investment on capital will be achievable were put to bed – at least for the time being.
Elsewhere, software also had a stellar session with Salesforce spiking by almost 23% after beating revenue forecasts and announcing an expanded partnership to pair Anthropic’s Claude chatbot with its platform, with the news reading across to the likes of Adobe and Autodesk, whose shares rose by 5.7% and 6.2% respectively. Nor did the rallies end there – cybersecurity firms Okta and CrowdStrike saw gains of 28% and 20.5% after raising their outlooks and beating estimates, with the boom in demand due to AI at the centre of the additional growth.
The euphoria is set to wane, however, as investors turn their attention to Federal Reserve Chair Warsh will deliver his keynote speech at Jackson Hole. There is much anticipation over his comments on the current Fed thinking, although it has already been made quite clear that the new Chair is happy to eschew the forward guidance to which investors had become accustomed. While there may be a passing reference to the Fed’s determination to return the inflation rate to the 2% target, it may also provide less of a clue than is being called for. Indeed, he could disappoint if he simply sticks to the script, with the theme of the symposium being “Financial Innovation: Implications for Payments and Policy”.
Even so, the Nvidia effect sent the main indices higher and edging once more to the records which each recently set. In the year to date, the Dow Jones has now added 11.5%, the S&P500 12.9% and the Nasdaq 14.2% with the broad tech gains sending the index comfortably higher yesterday.
Inevitably the FTSE100 missed out on the AI party given the relative lack of tech exposure among its constituents and the index limped to a weak close. Its appearance as a tracker without a real technology angle has been both a blessing and a curse this year, missing out on tech-led gains while coming back into fashion as a haven in times of turbulence in other markets. On balance, however, the FTSE100 has enjoyed a sturdy gain of 9.1% so far this year, with an average 3% dividend yield providing an extra boost to total returns.
The generally improved sentiment enabled the primary index to reverse some of the losses from yesterday, with a broad mark-up which encapsulated a cautious risk-on approach lifting the miners, while the banks also ticked higher and 3I Group rose after a broker upgrade. Losses were limited to a marginal decline in the likes of BAE Systems and Babcock International, and the gains hoisted the index to within 0.7% of the record closing high set in February.”
|
