By Amruta Khandekar and Bansari Mayur Kamdar
Feb 22 (Reuters) – Futures tracking the tech-heavy Nasdaq jumped more than 2% on Thursday after Nvidia’s bumper results and forecast added to the euphoria around artificial intelligence that has propelled Wall Street to record highs this year.
Nvidia’sNVDA.O shares surged 14.3% in premarket trade after the chip designer forecast a roughly three-fold surge in first-quarter revenue on strong demand for its AI chips.
The company, which also beat expectations for fourth-quarter revenue, could add more than $200 billion in market capitalization, if gains hold.
Shares of other companies, seen as beneficiaries of the AI boost, also got a shot in the arm. Nvidia’s rival Advanced Micro Devices AMD.O, server component supplier Super Micro Computer SMCI.O and Arm Holdings ARM.O jumped between 6% and 14%.
Exchange traded funds (ETFs) tracking semiconductors such as VanEck Semiconductor ETF SMH.O and iShares Semiconductor ETF SOXX.O gained 5.9% and 4.1%, respectively, while Global X Robotics and Artificial Intelligence ETF BOTZ.O climbed 2.9%.
Big Tech and growth stocks such as Alphabet GOOGL.O, Microsoft MSFT.O, Tesla TSLA.O and Meta Platforms META.O rose between 1.5% and 2.4%.
Nvidia’s earnings were a major test for the AI-fueled rally on Wall Street. Some analysts had cautioned that disappointing results could spark a steep selloff among technology stocks.
Wall Street could notch fresh record highs in the near term if the momentum gathers pace.
“Nvidia’s strong results and guidance point to overall solid AI infrastructure spending trends, in our view,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note.
“In fact, the latest developments like OpenAI’s Sora’s text-to-video and management commentary from Nvidia suggest that our estimates on overall AI industry revenue (a 15x growth between 2022–27 to $420 billion) could prove to be conservative.”
Meanwhile, investors stuck to bets the U.S. Federal Reserve will begin cutting interest rates in June after minutes from the central bank’s latest meeting showed a majority of policymakers were concerned about the risks of easing policy too soon.
At 6:30 a.m. ET, Dow e-minis 1YMcv1 were up 156 points, or 0.4%, S&P 500 e-minis EScv1 were up 67 points, or 1.34%, and Nasdaq 100 e-minis NQcv1 were up 373 points, or 2.13%.
Of the 395 companies in the benchmark S&P 500 index that have reported earnings for October-December quarter as of Friday, 80% beat analyst expectations, according to LSEG data.
Rivian RIVN.O and Lucid LCID.O fell 14.4% and 8.4%, respectively, after the electric vehicle startups forecast 2024 production well below analyst estimates on slowdown in demand.
Royal CaribbeanRCL.N rose 5.1% after lifting its annual profit forecast as the company benefits from strong cruise demand.
Peers Norwegian Cruise Line Holdings NCLH.N and Carnival Corp CCL.N added 3.2% and 5.5%, respectively.
Nvidia vs the rest of the Magnificent 7 https://reut.rs/4bDd4nY
(Reporting by Amruta Khandekar and Bansari Mayur Kamdar in Bengaluru; Editing by Shounak Dasgupta and Shinjini Ganguli)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.