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Nvidia sales surge and hopes for end of hike cycle help stock markets
Good morning, and welcome to our live, rolling coverage of business, economics and financial markets.
Stock markets have gained ground after chipmaker Nvidia late last night showed that it is still riding high on the boom in generative artificial intelligence.
Really looks as if a new computing era has begun: #Nvidia reports Q2 Data Center revenue of $10.32bn, up 171% YoY. “During the quarter, major cloud service providers announced massive Nvidia H100 (artificial intelligence) infrastructures,” CEO Jensen Huang said.… pic.twitter.com/wMiee1tZf8
— Holger Zschaepitz (@Schuldensuehner) August 23, 2023
Shares in the chipmaker rose by 7% in after-hours trading, meaning they are likely to open at a record high later today. The top line:
The chipmaker Nvidia has far surpassed quarterly expectations, raking in $13.5bn in revenue – over $2bn more than the $11.2bn Wall Street analysts had predicted – amid skyrocketing demand for its computer chips that power artificial intelligence (AI) systems.
The blockbuster second quarter comes at a moment of intense hype around generative AI, a mood that Nvidia has been uniquely positioned to capture. The 30-year-old company is one of the biggest winners in the AI boom and is now valued at over $1tn, with its chips powering nearly all the world’s major artificial intelligence apps, including ChatGPT.
Hong Kong’s Hang Seng index is up 2.2%, while Shanghai Stock Exchange’s composite index has gained 0.4% with a few minutes of trading to go.
Futures suggest that the FTSE 100 and Germany’s Dax benchmark index will gain 0.6% on opening this morning.
It is not just Nvidia that has boosted the mood. In the sometimes upside-down world of financial markets, weak US and European economic data may have helped the stock market. The purchasing managers’ index (PMI) numbers from S&P Global (which bought IHS Markit) delivered a round of negative news for the global economy yesterday.
Analysts at Deutsche Bank, led by Henry Allen, wrote:
Concerns about a hard landing gathered pace over the last 24 hours, which triggered a major rally as speculation mounted that central banks might press pause on their rate hikes. Those fears were driven by several factors, but the biggest were the downside surprises in the flash PMIs, which suggested the global economy was quite a bit weaker in August than previously thought.
US mortgage rates have also hit their highest since 2000, and US jobs numbers may also be revised lower, further denting support for more rate hikes.
The key issue will be the response of central bankers, who have gathered for their annual shindig starting today at the Wyoming resort of Jackson Hole. If they indicate that their appetites for higher interest rates may be waning, then expect that to light the touchpaper for a further share price rally.
The agenda
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11am BST: UK Confederation of British Industry distributive trades retail figures (August; previous: -25 points)
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1:30pm BST: US durable goods orders (July; prev.: up 4.7% month-on-month; consensus: -4%)
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1:30pm BST: US initial jobless claims (week of 19 August; prev.: 239,000; cons.: 240,000)
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All day (MDT): Economic Policy Symposium, in Jackson Hole, Wyoming
Key events
If Nvidia and computer chip stocks are on the crest of an artificial intelligence wave, here is an example of a stock whose wave has certainly broken: exercise bike company Peloton.
Peloton was once the darling of the coronavirus pandemic-era stock market, with a market value approaching $50bn (£39bn) at the height of the bubble as investors raced to buy shares for the stay-at-home (for the middle class at least) economy.
It is safe to say that bubble has burst, and its shares hit another record low last night after it missed profit expectations and said subscribers to its exercise videos – streamed through the screen attached to the bike – dropped. It partly blamed a recall of its bike seat post after US regulators raised safety fears.
Shares in the company slumped by as much as a quarter as low as $5.05 on Wednesday, down from above $170 at the height of the pandemic.
Also of note: European semiconductor companies are among the big winners this morning, borrowing momentum from Nvidia.
ASM International, ASML, Aixtron and BE Semiconductor have each gained between 2.6% and 4.3% in early trading.
European shares have gained across the board in the opening trades, as expected.
Here are the snaps from Reuters:
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EUROPE’S STOXX 600 UP 0.7%
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BRITAIN’S FTSE 100 UP 0.7%
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FRANCE’S CAC 40 UP 1.0%, SPAIN’S IBEX UP 0.8%
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EURO STOXX INDEX UP 0.9%; EURO ZONE BLUE CHIPS UP 1.0%
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GERMANY’S DAX UP 1%
Nvidia sales surge and hopes for end of hike cycle help stock markets
Good morning, and welcome to our live, rolling coverage of business, economics and financial markets.
Stock markets have gained ground after chipmaker Nvidia late last night showed that it is still riding high on the boom in generative artificial intelligence.
Really looks as if a new computing era has begun: #Nvidia reports Q2 Data Center revenue of $10.32bn, up 171% YoY. “During the quarter, major cloud service providers announced massive Nvidia H100 (artificial intelligence) infrastructures,” CEO Jensen Huang said.… pic.twitter.com/wMiee1tZf8
— Holger Zschaepitz (@Schuldensuehner) August 23, 2023
Shares in the chipmaker rose by 7% in after-hours trading, meaning they are likely to open at a record high later today. The top line:
The chipmaker Nvidia has far surpassed quarterly expectations, raking in $13.5bn in revenue – over $2bn more than the $11.2bn Wall Street analysts had predicted – amid skyrocketing demand for its computer chips that power artificial intelligence (AI) systems.
The blockbuster second quarter comes at a moment of intense hype around generative AI, a mood that Nvidia has been uniquely positioned to capture. The 30-year-old company is one of the biggest winners in the AI boom and is now valued at over $1tn, with its chips powering nearly all the world’s major artificial intelligence apps, including ChatGPT.
Hong Kong’s Hang Seng index is up 2.2%, while Shanghai Stock Exchange’s composite index has gained 0.4% with a few minutes of trading to go.
Futures suggest that the FTSE 100 and Germany’s Dax benchmark index will gain 0.6% on opening this morning.
It is not just Nvidia that has boosted the mood. In the sometimes upside-down world of financial markets, weak US and European economic data may have helped the stock market. The purchasing managers’ index (PMI) numbers from S&P Global (which bought IHS Markit) delivered a round of negative news for the global economy yesterday.
Analysts at Deutsche Bank, led by Henry Allen, wrote:
Concerns about a hard landing gathered pace over the last 24 hours, which triggered a major rally as speculation mounted that central banks might press pause on their rate hikes. Those fears were driven by several factors, but the biggest were the downside surprises in the flash PMIs, which suggested the global economy was quite a bit weaker in August than previously thought.
US mortgage rates have also hit their highest since 2000, and US jobs numbers may also be revised lower, further denting support for more rate hikes.
The key issue will be the response of central bankers, who have gathered for their annual shindig starting today at the Wyoming resort of Jackson Hole. If they indicate that their appetites for higher interest rates may be waning, then expect that to light the touchpaper for a further share price rally.
The agenda
-
11am BST: UK Confederation of British Industry distributive trades retail figures (August; previous: -25 points)
-
1:30pm BST: US durable goods orders (July; prev.: up 4.7% month-on-month; consensus: -4%)
-
1:30pm BST: US initial jobless claims (week of 19 August; prev.: 239,000; cons.: 240,000)
-
All day (MDT): Economic Policy Symposium, in Jackson Hole, Wyoming
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