Asian technology shares ride high on AI optimism after Nvidia’s ‘stunning’ results – business live

The latest market movements underscore a bifurcated but generally optimistic economic landscape, driven by both cutting-edge technology and traditional retail resilience. Nvidia's recent financial disclosure has been a significant catalyst, with the company reporting a near doubling in quarterly revenue to almost $100 billion. This performance has instilled a sense of relief among investors, particularly those in Asian technology markets, who are now riding a wave of AI optimism. The company's ability to address a 'laundry list of concerns' regarding competition, AI spending durability, memory costs, margins, financing, and open-source models, as noted by Ben Barringer of Quilter Cheviot, has been crucial in solidifying investor confidence. Despite some unresolved issues, notably concerning China, Nvidia's robust guidance and substantial backlog suggest sustained demand for its AI-enabling technologies.

Nvidia's $100bn Revenue

Nvidia's announcement of nearly $100 billion in quarterly revenue, representing a doubling, has been a pivotal moment for the technology sector. This 'stunning' result has fueled a surge in Asian technology shares, reflecting widespread investor belief in the continued growth of artificial intelligence. The company's management effectively tackled various investor anxieties during its earnings call, including competitive pressures from hyperscalers developing their own silicon, by highlighting its ecosystem advantage and customer relationships like AWS. Furthermore, Nvidia's guidance, implying 70% revenue growth despite demand running closer to 100% and being supply-constrained, along with a roughly $2 trillion backlog, strongly indicates the enduring strength of AI demand.

Concerns about gross margins, which Nvidia reported at 75% but guided to 74% due to rising memory prices, were also addressed. Management suggested margins could 'trough at around 71%' before recovering, a explanation that investors seemed to accept given the immense demand. The company also clarified its financing approach, emphasizing the creation of 'financing platforms' rather than direct loans, to mitigate perceived credit risks. While open-source AI models were acknowledged as coexisting with closed models, positioning Nvidia well, the 'bigger unresolved issues' surrounding China's contribution to current numbers remain a point of uncertainty for the future.

Halfords' £55m-£65m Profit

In a separate but equally impactful development for the UK retail sector, Halfords, the bike and car parts retailer, significantly raised its annual profit forecast to between £55 million and £65 million, surpassing analyst expectations of £52.6 million. This upgrade led to a more than 10% jump in its shares. A key factor in this improved outlook was the 'unusually warm summer weather,' which drove 'strong demand in seasonal categories,' particularly for air conditioning services like regassing units, as well as cycling and camping equipment. Analysts at Peel Hunt estimated this weather-related boost added approximately £5 million to Halfords' first-half profit.

Beyond the seasonal uplift, Halfords attributed the remainder of its upgrade to 'continued momentum' in its core business, reflecting the success of its turnaround plan under chief executive Henry Birch. The company expects a more first-half-weighted profit profile due to strong trading and increased technology and marketing investment in the second half. Retail analyst Ben Hunt of Panmure Liberum upgraded his Halfords forecasts, noting a 'clear underlying improvement' and anticipating sustained momentum from initiatives like Fusion garage conversions and the return of the cycling replacement cycle. This indicates that while external factors provided a short-term boost, the company's internal strategies are also yielding positive, longer-term results.