Global tech stocks rebound after Micron’s profit surge

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Global tech stocks rebounded on Thursday after US chipmaker Micron’s stellar results, extending a volatile run for a sector buffeted by concerns that the AI-driven rally had run too far. 

Futures tracking the Nasdaq 100 index were 2.2 per cent higher, after falling sharply at the beginning of the week, with Micron up more than 17 per cent in pre-market trading. S&P 500 futures rose 0.8 per cent. 

Micron’s results “reignited hopes about AI-fuelled growth, and helped to push back against fears that we were in some kind of bubble”, Deutsche Bank analysts wrote on Thursday. 

The chipmaker — which has been catapulted into Wall Street’s club of stocks worth more than a trillion dollars after its shares more than trebled this year — reported an almost 15-fold surge in quarterly profits after US trading closed on Wednesday, beating analysts’ expectations.

The results were enough to “restore AI optimism . . . while highlighting continued strength in AI-driven demand, particularly in data centre memory”, said Mark Haefele, chief investment officer at UBS Global Wealth Management. 

At the end of a volatile month for the tech sector, other US chip stocks were also boosted by the news, with Qualcomm rising more than 11 per cent in pre-market trading and Intel up more than 5 per cent.

South Korea’s Kospi — with its heavy weighting to chip and memory stocks — climbed 5.4 per cent, reversing most of its losses after tumbling at the start of the week. Chip giant SK Hynix jumped more than 13 per cent, while Samsung rose more than 5 per cent.

The Stoxx Europe 600 was up 0.7 per cent, with chipmaking giant ASML up 4.5 per cent. Japan’s Topix rose 1.3 per cent. 

Chip stocks and memory makers led a sell-off on Wall Street earlier in the week, which analysts attributed in part to nerves ahead of Micron’s earnings, as well as broader worries about the scale of spending on the AI build-out, whether it would translate into tangible returns and concerns about higher US interest rates.

In a sign of market jitters over bad news in the tech sector, Broadcom’s results earlier in June prompted a broad sell-off after its AI revenue forecast fell short of the most bullish forecasts.

The nerves around Micron’s results this week highlight investors’ focus on the level of supply and demand for memory chips, after a relative supply shortage sent chip and memory stocks soaring this year.

“The second the market gets a hint that supply is catching up with demand . . . stocks will be awful,” said Sarah Ketterer, chief executive of Causeway Capital.

Markets were also buoyed on Thursday by oil prices falling back to prewar levels. Benchmark Brent crude was down 1.8 per cent at $72.40 on Thursday, slightly below its closing price just before the US and Israel launched strikes on Iran at the end of February.