Asia AI Rally Reaches New York as Tonight’s Earnings Become the Next Test
The rebound in semiconductor stocks across Asia and Europe carried into premarket trading in New York on Wednesday. According to The Wall Street Journal, Nasdaq futures rose 0.75 percent and S&P 500 futures gained 0.25 percent. Dow futures were little changed.
In premarket trading, buying gathered in the names that had fallen hardest last week. The Wall Street Journal reported that Micron and Intel each rose about 3.4 percent. Super Micro Computer, which released preliminary results overnight, jumped more than 12 percent, and chip stocks broadly were strong, including Nvidia, AMD and Marvell.
The starting point was results from two companies released the night before. Super Micro Computer’s preliminary quarterly revenue came in well above market expectations, and SpaceX posted its first quarterly profit since its listing. SpaceX shares rose 9 percent in premarket trading.
Netflix moved the other way, falling more than 6 percent on disappointment after it lowered its advertising revenue target. Even within technology stocks, the content of earnings is dividing share prices.
The rebound draws attention because of last week’s shock. Last week the Philadelphia Semiconductor Index fell more than 11 percent in its worst week in over a year. A hotter-than-expected inflation reading raised fears that it would push up the cost of borrowing to build data centers, and the debt burden of companies such as CoreWeave, which build data centers with large borrowings, came under scrutiny.
The same rebound was confirmed in Asia. The Kospi closed up 3.3 percent on the strength of big semiconductor stocks, and Japan’s Nikkei 225 rose 0.85 percent. In the Korean market, however, gains narrowed in the afternoon after news of an Australian data center operator’s outlook cut, a sign that anxiety has not fully lifted.
The bond market was quiet. According to The Wall Street Journal, the yield on the 10-year U.S. Treasury note was little changed near 5.11 percent, and the market put the probability of the Federal Reserve holding rates steady at next week’s meeting at about 85 percent. Oil prices held near $110 a barrel.
The real test comes tonight. Tesla and Meta report quarterly results after the close. The market is expected to look less at the numbers themselves than at how much more the companies plan to spend on artificial intelligence, and at the pace at which that spending is returning as revenue.
The question that set off last week’s selling is a simple one. Do data centers built with borrowed money lead to profits? One night of rebound has not made that question go away, and the shared view on Wall Street is that the answer will ultimately come from the earnings statements.
