Before the bell: Asia pops further

The Bel20 held steady, more interest rate cuts, Alphabet and Microsoft bicker in Brussels, and how is the AI rally doing?

The Brussels star index held up well yesterday, while an average European share had to lose half a percent. A notable loser in the Bel20 (+0.2%) was the share of Melexis (-4.7%) after Kepler Cheuvreux significantly lowered its price target for the chip developer. The brokerage house did so because it expects stock corrections for chips and sensors in the automotive sector. Argenx (+3.5%) held up the index after concerns surrounding Amgen’s rival drug Uplizna (-5.5%) subsided. Swedish and Czech central banks cut interest rates by 25 basis points to 3.25% and 4.25%, respectively. HSBC chief economist Simon Wells expects the ECB, too, to cut interest rates by 25 basis points at each meeting from now until April to eventually 2.25%. In the United States, the S&P 500 closed 0.2% lower and the Nasdaq remained unchanged. Hewlett Packard Enterprise (+5.1%) received an advisory raise from Barclays; analysts say demand for AI will drive increased demand for HPE’s data center hardware.

This morning in Asia the rally continues, in Japan the Topix climbs 1.9% and in Hong Kong the Hang Seng Index rises 2.8%. Shares like Alibaba (+6.6%) and Tencent (+4%) quietly climb further there. In Sweden, we get the figures of clothing chain H&M. In the US, we get the results from Accenture and Costco. Unemployment benefit claims are also announced. 

Bickering at the top

Alphabet, the company behind search robot Google, has filed a complaint in Brussels against competitor Microsoft. According to Alphabet, Microsoft would unfairly use its Windows operating system to link customers to its Azure cloud services. Moving an existing Windows license to Microsoft’s own Azure cloud services can be done free of charge. But if you wish to move that same Windows license to a competitor’s cloud services, according to Alphabet’s Amit Zavery, you suddenly have to purchase a new server license and dig deep. This, according to Alphabet, limits consumers’ free choice and keeps cloud service prices unnecessarily high. 

What is the state of the AI rally?

Those who want an answer to that question should look at Micron Technology’s figures. The company posted revenues of $7.8 billion in the fourth quarter of its broken fiscal year. That’s a 93% growth in sales compared to the same period last year. The memory chip manufacturer’s figures reflect the health of the AI rally. That’s because the construction of as many data centers for artificial intelligence is increasing demand for high-bandwidth memory chips. Those memory chips are faster and more energy efficient. Due to the demand, Micron is already predicting that the next fiscal year will be a record year. As a result, shares were eagerly picked up aftermarket, and a share of the company was worth 13% more in aftermarket trading. The company’s sterling results will boost the entire sector today.

Did you know…

according to a study by Bain Technology, the market for AI Hardware will grow to $990 billion by 2027? Today, that market has a size of $185 billion. So investors in AI need not worry just yet.

This article was translated from Dutch and was originally published on Spaarvarkens.be.