Important points
While most Big Tech companies are reporting their financial results for the current fiscal year amid a lot of uncertainty in the market, the world’s most valuable companies are yet to come. Nvidia, whose powerful chips are fueling much of the AI boom, is scheduled to report earnings after the bell on Wednesday. European technology companies will be among those watching the results intently. “NVIDIA’s earnings are widely viewed as a barometer of the strength and durability of the global AI investment cycle,” Camila Papaleo, product manager at VanEck, told CNBC. Profits at hyperscalers such as Google, Meta, Microsoft and Amazon fell as investors worried about their huge capital spending plans for AI infrastructure. Papaleo said that if Nvidia provides strong guidance with continued capital spending, sustained data center expansion and strong demand for next-generation chips, Europe’s technology sector, particularly in semiconductors and infrastructure, could be revitalized. “In contrast, if NVIDIA signals that growth is starting to normalize or that customers are digesting previous purchases, it could trigger a broader reassessment of AI-driven expectations,” he added. These are the European tech stocks most likely to react. ASML Dutch chip equipment manufacturer ASML is a key component in Nvidia’s cutting-edge AI chip supply chain. The company is the only manufacturer of extreme ultraviolet (EUV) lithography equipment, without which Nvidia could not print extremely fine patterns on silicon wafers. “If NVIDIA’s outlook is very strong, it will require further sub-capacity expansion, which will require more equipment from ASML,” Bernstein managing director David Dye told CNBC. Papaleo said bullish signals on hyperscaler spending could support a longer AI-driven capex cycle, while “any signs of moderation could weigh on sentiment towards upstream equipment suppliers.” BESI BE Semiconductor Industries (BESI) is another Dutch semiconductor equipment company that makes machinery used in assembly and packaging processes and is purchased by foundries such as TSMC, which makes chips for NVIDIA. “BESI is a leading equipment provider supporting capacity expansion for foundries and memory players, which are also suppliers to Nvidia,” said Dai. If Nvidia’s earnings highlight solid demand for next-generation GPUs, it will provide a basis for continued investment in packaging technology, Papaleo told CNBC. “Conversely, given BESI’s sensitivity to AI momentum, any signs of bottlenecks easing or orders being delayed could trigger more volatility,” he added. Infineon Infineon is a German semiconductor manufacturer that produces power electronics and automotive chips. The company is one of Europe’s largest semiconductor manufacturers. “Infineon ships chips that connect directly to Nvidia’s AI servers, so more demand for Nvidia means more demand directly from Infineon,” Dai said. STMicroelectronics STMicroelectronics is a Swiss semiconductor company that manufactures and designs chips. “As one of Europe’s largest semiconductor manufacturers, STMicroelectronics is sensitive to changes in sentiment across the chip sector,” Papaleo said. He told CNBC that Nvidia’s strong performance could reinforce the view that the semiconductor cycle is stabilizing and demand across end markets is improving, which should support growth at STMicroelectronics. “Conversely, NVIDIA’s slowing orders, softening prices and signs of margin pressure could weigh on sentiment across the sector, even for a company focused on automotive and industrial markets rather than data center chips,” Papaleo added.
