Nasdaq futures rally as Nvidia's blowout forecast boosts AI stocks

[August 24, 2023]  (Reuters) - Futures tracking the Nasdaq 100 index jumped on Thursday after a stellar forecast from Nvidia boosted investor confidence in an artificial intelligence (AI) boom and lifted shares of major technology and growth stocks. Shares of Nvidia climbed 7.9% to $508.56 premarket after the chip designer late on Wednesday forecast quarterly revenue that far exceeded expectations, and said it would buy back $25 billion in stock.

Nasdaq 100 e-minis were up 172 points, or 1.13% and S&P 500 e-minis were up 21.75 points, or 0.49% at 5:28 a.m. ET.

"It is clear...that AI demand is still outstripping supply," Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note.

"Within the tech sector, we think software and internet stocks are best positioned to ride the next wave of the technology cycle and the broadening of AI demand."

Nvidia's results also lifted Microsoft and Alphabet shares up 1.8% and 1.3%, respectively. Both companies have been rushing to incorporate generative AI into their web search platforms.

Shares of other technology-linked stocks such as Amazon.com, Tesla and Meta Platforms rose between 1% and 2.2% before the bell.

Other major AI players, such as data analytics company Palantir Technologies and chip firms Advanced Micro Devices and Marvell Technology gained between 2.6% and 4.4%.

Semiconductor companies overseas also advanced, with Europe's ASM International, BE Semiconductor, ASML Holding up between 1.5% and 2.7%.

Investors had been hoping that results from Nvidia, the world's most valuable chipmaker, could revive a rally in broader stock markets which had stalled recently due to concerns about interest rates staying higher for longer.

The logo of technology company Nvidia is seen at its headquarters in Santa Clara, California February 11, 2015. REUTERS/Robert Galbraith/File Photo

Data pointing to slowing business activity in the United States on Wednesday helped reignite expectations that the Federal Reserve was closing in on the end of its rate hikes, sending the U.S. 10-year Treasury yield tumbling from 16-year highs.

The focus is now on a speech by Fed Chair Jerome Powell at an annual central bank summit in Jackson Hole on Friday for more clues on the direction for the U.S. interest rates.

Investors will also watch out for July's durable goods data as well as weekly jobless claims due later in the day to gauge the strength of the U.S. economy.

Dow e-mini futures on Thursday were down 45 points, or 0.13%.

Pressuring Dow futures, Boeing fell 1.8% premarket after the planemaker said it had recently identified a new 737 MAX quality problem involving supplier Spirit AeroSystems that will delay near-term deliveries.

Splunk Inc gained 13.9% after the data analytics software maker forecast third-quarter revenue above market estimates on expectations of AI-related spending.

(Reporting by Amruta Khandekar and Shreyashi Sanyal in Bengaluru; Editing by Savio D'Souza and Shinjini Ganguli)

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