Stocks rally as bumper Nvidia report offsets Fed rate concern

HONG KONG: Asian markets rallied Thursday (Nov 20) after blowout earnings from chip powerhouse Nvidia cooled worries over an AI bubble and overshadowed a Federal Reserve report that dealt a blow to hopes for a December interest rate cut.

Global equities have struggled of late owing to warnings that valuations – particularly in the tech sector – have been overdone and are due a pullback, and possibly a sharp correction, following a record-breaking rally this year.

Some market-watchers have warned that the hundreds of billions of dollars pumped into artificial intelligence will not likely realise any profits for some time, while others point out that infrastructure to meet demand is not yet in place.

Wednesday’s report from Nvidia – one of the torchbearers of the AI revolution – was therefore seen as a bellwether on the industry.

And it topped expectations on fierce demand for its sophisticated chips, with chief executive Jensen Huang brushing off the recent concerns.

“There’s been a lot of talk about an AI bubble,” he told an earnings call. “From our vantage point, we see something very different.”

Shares in the firm – which last month became the world’s first US$5 trillion stock – rose more than 5 per cent in post-market trade, while S&P 500 and Nasdaq futures also soared.

In Asia, tech firms led the gains. South Korea’s Samsung and SK hynix, Taiwan’s TSMC and Japanese investment giant SoftBank all enjoyed a strong day.

Among broader markets, Tokyo briefly jumped more than 4 per cent, while Seoul and Taipei were more than 2 per cent higher.

Hong Kong, Shanghai, Sydney, Singapore, Wellington and Jakarta were also well up.

However, SPI Asset Management’s Stephen Innes said: “Nvidia’s latest forecast has, for now, dulled the sharpest edges of the AI-bubble anxiety that had gripped global markets.

“But make no mistake: This is still a market balancing on a wire stretched between AI euphoria and debt-filled reality.

“Nvidia’s results may have bought the tape a reprieve, but they haven’t rewritten the script – they’ve simply reminded traders why they still cling to the idea that one last Santa-rally can be extracted from the AI supercycle.”