Key Points
- Chip giant Nvidia, the world’s most valuable company, will report its earnings on Wednesday, which could have a sizable impact on the market.
- “Nvidia’s earnings are widely viewed as a barometer for the strength and durability of the global AI investment cycle,” Camilla Papaleo, product manager at VanEck, told CNBC.
- CNBC spoke to analysts about which European tech stocks could be most impacted.
Most Big Tech companies have reported this earnings season — with market jitters abounding — but the world’s most valuable company is still to come. Nvidia , whose powerful chips power much of the AI boom, will report financial results after the bell on Wednesday. European tech companies will be among those watching the results intently. “Nvidia’s earnings are widely viewed as a barometer for the strength and durability of the global AI investment cycle,” Camilla Papaleo, product manager at VanEck, told CNBC. Earnings from hyperscalers like Google , Meta , Microsoft and Amazon , were followed by a selloff as investors worried about huge capex plans on AI infrastructure. If Nvidia delivers strong guidance signalling continued capex, sustained data center expansion and robust demand for next generation chip, it could boost the European tech sector, particularly in semiconductors and infrastructure, said Papaleo. “By contrast, if Nvidia suggests growth is beginning to normalize or that customers are digesting earlier purchases, it could spark a broader reassessment of AI-driven expectations,” she added. These are European tech stocks that could react the most. ASML Dutch chip equipment manufacturer ASML is a crucial component in the supply chain of Nvidia’s most advanced AI chips. The company is the only producer of extreme ultraviolet (EUV) lithography machines, without which Nvidia couldn’t print extremely fine patterns on silicon wafers. “If the Nvidia outlook is very strong, then more semi capacity expansion is needed, which will require more equipment from ASML,” David Dai, managing director at Bernstein, told CNBC. While a bullish signal on hyperscaler spending could support the narrative of prolonged AI-driven capex cycle, Papaleo said that “any hint of moderation may weigh on sentiment toward upstream equipment suppliers.” BESI BE Semiconductor Industries (BESI) , another Dutch semiconductor equipment company, makes machines used in the assembly and packaging processes, purchased by foundries like TSMC that produce Nvidia’s chips. “BESI [is] a major equipment provider to support the capacity expansion of foundry and memory players, which in turn are suppliers to Nvidia,” said Dai. If Nvidia’s earnings highlight robust next-generation GPU demand, it would support the case for continued investment in packaging technologies, Papaleo told CNBC. “Conversely, signs of easing bottlenecks or slowing orders may trigger sharper volatility given BESI’s high sensitivity to AI momentum,” she added. Infineon Infineon is a German semiconductor manufacturer that makes power electronics and automotive chips. The company is one of Europe’s largest semiconductor manufacturers. “Infineon ships chips that go directly into Nvidia’s AI servers, so more demand for Nvidia means more direct demand from Infineon,” said Dai. STMicroelectronics STMicroelectronics is a Swiss semiconductor company that manufactures and designs chips. “As one of Europe’s largest semiconductor manufacturers, STMicroelectronics is sensitive to shifts in overall chip sector sentiment,” said Papaleo. Strong results from Nvidia could strengthen the view that the semiconductor cycle is stabilizing and demand across end-markets is improving, which would support STMicroelectronics’ growth, she told CNBC. “Conversely, signs of slowing orders, softer pricing or margin pressure at Nvidia could weigh on sentiment across the sector, even for companies focused on automotive and industrial markets rather than data-center chips,” Papaleo added.
