London pre-open: Stocks seen up after Nvidia beats expectations

by | Aug 24, 2023

(Sharecast News) – London stocks were set to rise at the open on Thursday following a positive session on Wall Street, as investors cheered better-than-expected results from US chip designer Nvidia.
The FTSE 100 was called to open 24 points higher at 7,344.

CMC Markets analyst Michael Hewson said: “Back in Q1 when Nvidia set out its revenue guidance for Q2 there was astonishment at the extent of the upgrade to $11bn. This was a huge increase on its Q2 numbers of previous years, or any other quarter, with the upgrade being driven by expectations of a big increase in sales of data centre chips, along with investments in Artificial Intelligence.

“Last night Nvidia crushed these estimates with revenues of $13.5bn, datacentre revenue alone accounting for $10.3bn of that total, a 171% increase from a year ago. For comparison, in Q1 datacentre revenue accounted for $4.3bn.

“Gross margins also beat expectations, coming in at 71.2% as profits crushed forecasts at $2.70 a share. Nvidia went on to project Q3 revenues of $16bn, plus or minus 2%.

“The company also approved an extra $25bn in share buybacks, with the shares soaring above this week’s record highs in after-hours trading, with the big test being whether we’ll see those gains sustained when US markets reopen later today.

“On the back of last night’s positive finish, as well as the exuberance generated by the belief that interest rate hike pauses are coming next month, European markets look set to open higher later this morning.”

Investors were eying the release of US initial jobless claims at 1330 BST, and the start of the Jackson Hole symposium in Wyoming, in particular a speech by US Federal Reserve chair Jerome Powell.

In corporate news, Intertek said it had bought US-based PlayerLync Holdings for an undisclosed sum.

PlayerLync provides an app-based service for companies that combines mobile learning, operational support and compliance, content management and people engagement, Intertek said.

Recruitment firm Hays raised its full-year dividend and announced a £36m special payout to shareholders despite reporting a drop in annual profits.

Operating profit was down 6% at £197m, as a record performance in Germany was outweighed by tough markets in the UK and Ireland, Australia and New Zealand.

Nevertheless, the company saw cash generated by operations rise 9% to £199.3m, allowed it to up its final dividend by 5% to 3p a share and announce a further 2.24p return.

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