AI Chip Earnings Power Global Market Rally

Global stock markets advanced as investors continued to favor major technology companies associated with the artificial intelligence boom. In the United States, all three leading indexes rose on Tuesday. The Nasdaq Composite gained 1.18 percent, the S&P 500 rose 0.6 percent and the Dow Jones Industrial Average edged up 0.03 percent. Five members of the so-called Magnificent Seven rose, led by Tesla, while Nvidia gained nearly 1 percent after announcing a $3 billion investment in Meta’s equity offering. Meta and Microsoft shares fell. Semiconductor companies AMD, Broadcom and Intel also posted strong gains. The rally extended across Asia-Pacific markets on Wednesday. Seoul’s KOSPI climbed 5.84 percent by 03:00 GMT, supported by strong results from SK Hynix. The memory-chip maker reported third-quarter operating profit of 83.33 trillion won ($62.8 billion), about 630 percent higher than a year earlier, and its shares rose more than 8 percent. Japan’s Nikkei 225 and Taiwan’s TAIEX also rose, while Australia’s S&P/ASX 200 posted a smaller gain. Investors are looking to upcoming results from Microsoft, Alphabet, Amazon and Apple for indications of whether heavy spending on AI infrastructure will generate adequate returns. The article also notes that AI company Anthropic filed paperwork for an anticipated IPO and reported a substantial first-half 2026 net loss alongside its revenue. With technology companies investing hundreds of billions of dollars in AI, questions remain about whether markets are developing a speculative bubble reminiscent of the period before the 2000 dot-com crash. Gartner forecasts global AI investment of $2.7 trillion in 2026 and $3.6 trillion in 2027. Oil prices rose about 1 percent amid continuing conflict in the Middle East. Brent crude futures were around $115 a barrel, 59 percent above their level before the US-Israel war on Iran began. The article also cites hostilities involving Saudi Arabia and Yemen’s Iran-aligned Houthis.

CNBC’s Morning Squawk previews a day dominated by the Federal Reserve’s rate decision and major technology earnings, with inflation linking the two. Investors expect the Fed to leave interest rates unchanged and are cautious ahead of the announcement and Chair Kevin Warsh’s press conference. CNBC’s Steve Liesman will examine how Warsh balances his monetary-policy principles with his responsibility to lead the committee. Evercore ISI’s Krishna Guha says Warsh could reassure markets, though executing that approach carries risk. Treasury Secretary Scott Bessent is also scheduled to discuss the economy and midterms with CNBC, following earlier remarks that the Trump administration would not give artificial intelligence a “liability shield.” Asian markets provided a positive lead after South Korean chipmaker SK Hynix reported third-quarter operating profit above expectations and announced $25 billion in shareholder returns. Its results may influence sentiment toward AI-related chip stocks, including Micron. Chip shares had also supported Wall Street after Broadcom disclosed that banks would provide $63 billion in financing for its chips and networking equipment to be leased to Anthropic. Investors are awaiting quarterly results from Alphabet and Microsoft, as well as Oracle’s investor day, amid continuing questions about AI-related debt. The newsletter also reviews European bank results: UBS reported a nearly 30% increase in pretax profit, while Deutsche Bank recorded a third consecutive quarter of record profits and $2.2 trillion in assets under management. Robinhood shares fell after earnings missed expectations, with weakness in cryptocurrency weighing on profit. Elsewhere, Jio Platforms shares rose more than 20% on their first day of trading in India after the country’s largest-ever IPO raised $3.2 billion. Geopolitical uncertainty centers on elections in Brazil and Israel. Senator Flavio Bolsonaro traveled to the U.S. after failing to comply with a Brazilian court order, a development that could strain relations between Brazil’s President Lula and President Trump. Israel’s election produced no clear likely winner, according to exit polls. The newsletter closes with Trump joking that a promised $5,000 payment to U.S. adults would buy little more than a meal at Mar-a-Lago, amid midterm-election concerns about affordability.

Asian technology shares rallied on Wednesday after SK hynix reported a sharp increase in third-quarter operating profit, renewing investor confidence in businesses linked to artificial intelligence. The South Korean chipmaker said operating profit rose 632% to US$62.8 billion (€54.2 billion), and that it had recorded six consecutive quarters of record revenue and operating profit. Its shares gained almost 9%, while Samsung rose more than 8% ahead of its own results, helping South Korea’s Kospi climb over 6%. Japan’s Nikkei 225, Taiwan’s market and several other Asia-Pacific markets also advanced, tracking gains in the US Nasdaq. The report places the chip earnings in the context of recent doubts about whether the AI boom can support the massive spending on computing infrastructure. Anthropic’s IPO filing, which disclosed first-half revenue growth of about 1,300% and substantial planned capital expenditure, and a US$63 billion financing arrangement involving Broadcom and several financial firms added to optimism. Market commentators said the announcements reinforced expectations for demand across the AI supply chain. Investors were also watching earnings from Microsoft and Alphabet, due later Wednesday, and results from Amazon, Apple and Intel on Thursday. Markets faced other uncertainties. Investors awaited the Federal Reserve’s policy decision, with rates expected to remain unchanged, while scrutinising its statement and Chair Kevin Warsh’s remarks for clues about future policy. Markets were pricing in a rate hike in December. Meanwhile, oil prices rose as results came in from Israel’s general election. With Benjamin Netanyahu’s Likud party and the opposition apparently close in the polls, Netanyahu said he would seek to form a coalition and could work with US President Donald Trump against Iran. Opposition candidate Gadi Eisenkot said voters had chosen change and that he would try to form a new government.

SK Hynix reported record third-quarter revenue and operating profit, beating analyst estimates and sending its shares up more than 10%. Revenue reached 104.62 trillion won ($78.86 billion), compared with expectations of 98.34 trillion won, while operating profit was 83.33 trillion won versus 76.72 trillion won expected. Revenue increased 327.9% from a year earlier and operating profit rose 632.1%; both also grew substantially from the previous quarter. SK Hynix outperformed South Korea’s Kospi, which gained 6.25% on the day. The chipmaker announced plans to return about 100 trillion won to shareholders through dividends and share buybacks. These plans include at least 30 trillion won in cash dividends and 60 trillion won in share buybacks and cancellations. The company approved a 14 trillion won third-quarter dividend, including a special dividend funded by gains from its investment in Japanese chipmaker Kioxia. It also plans a 20 trillion won share buyback, with half to be cancelled this year, and raised its shareholder-return target to more than 50% of cumulative free cash flow generated from 2025 to 2027. CEO Kwak Noh-Jung said market volatility and a correction in semiconductor stocks led SK Hynix to pause its review of possible fundraising and IPO options for its U.S. subsidiary Solidigm. Solidigm concluded that an IPO would not currently deliver the anticipated benefits. The company expects continued growth in AI-related investment and says memory demand is likely to exceed supply for the time being. SK Hynix expects next-generation HBM4 to surpass HBM3E in shipments and revenue in the fourth quarter, as production ramps up at its M15X facility in Cheongju. DRAM prices and server DDR5 shipments rose in the third quarter, and the company has long-term agreements with 14 major customers covering more than half its production capacity for 2027 and 2028. One analyst maintained a neutral rating, preferring Micron and Samsung on risk-reward grounds, while describing SK Hynix shares as undervalued and favoring its U.S.-traded ADRs.