Global equity markets, excluding the closed US market, surged robustly on Friday as the latest wave of market anxiety and pessimism surrounding the artificial intelligence computing power trading theme significantly dissipated.
European benchmark indices extended their winning streak to a fourth week, once again reaching record highs.
The Korean won and the Korean stock market staged a remarkable joint recovery on Friday, with the benchmark KOSPI Composite Index closing nearly 6% higher, fueled by strong rebounds in the shares of the two memory giants, SK Hynix Inc and Samsung Electronics Co Ltd.
The US dollar index touched its lowest point in two weeks, while gold continued its rebound from recent lows.
With US markets closed for the Independence Day holiday, futures data indicated the Nasdaq 100 index futures rose 1.2% in holiday trading.
The global rally on Friday highlighted that capital is rapidly correcting the overly pessimistic pricing of the "Meta selling computing power equals an industry-wide glut" narrative.
The powerful recovery in shares of Korean memory chip leaders SK Hynix Inc and Samsung Electronics Co Ltd helped propel the MSCI Asia Pacific Index up by 2%.
European utilities and the semiconductor equipment and materials sector, led by lithography giant ASML Holding NV and hybrid bonding leader BE Semiconductor Industries NV, were among the strongest performers, driving the Stoxx Europe 600 Index to a fourth consecutive week of gains and a new all-time high.
Friday's advance marked the latest turn in a volatile trading period, where markets had been actively weighing whether the second-quarter rally driven by the AI computing power frenzy had gone too far.
As global markets resumed their climb following a two-day selloff in chipmakers and AI infrastructure leaders, investors are anxiously awaiting the upcoming tech earnings season.
This season is viewed as the next major signal for judging whether massive spending on AI computing infrastructure can translate into increasingly strong AI-related revenue and profits.
Just as news that Meta Platforms Inc was preparing to sell idle AI computing capacity sparked fears of an AI power supply glut, severely hitting the AI investment theme and causing a collective one-day plunge in related global tech stocks, the AI chip leader NVIDIA Corp stated on Thursday it was entering revenue-sharing agreements with rapidly scaling AI startups.
This move allows these AI clients to exchange a portion of future profits for significant access to NVIDIA Corp's AI GPU computing clusters.
In the view of Wall Street analysts, this action by NVIDIA Corp represents the strongest industry rebuttal from a market leader to the pessimistic "AI infrastructure demand glut" narrative, highlighting that demand for AI computing power remains nearly insatiable as AI applications and agents gain global popularity.
Analysts firmly believe that Meta's sale of computing capacity, SoftBank's establishment of SB Neo to enter the US AI cloud market, and NVIDIA Corp's new model of offering computing power in exchange for revenue share are essentially bets not on a "computing power surplus," but on the long-term expansion of AI training and inference demand into the gigawatt-scale infrastructure era.
Global Risk Assets Stage Major Comeback; European Equities Hit Fresh Records
"The market fundamentals for AI computing power remain very, very strong, and the market continues to underestimate them," stated Tim Moe, an equity strategist at Goldman Sachs Group Inc, on Friday.
"For memory chip stocks and the entire AI computing hardware supply chain, the overall positive profit environment still has a long way to go."
As shown in the chart, the European benchmark stock index extended its gains, rising above its key moving average, with the Stoxx Europe 600 Index heading for its best weekly performance since May.
In European markets, ASML Holding NV is now the region's highest-valued listed company, and its US-listed ADRs have surged approximately 70% year-to-date, significantly outperforming the S&P 500 and Nasdaq 100 indices.
The logic behind this lithography giant's benefit from the unprecedented global expansion cycle for AI chips and memory chips is straightforward: expansions in advanced logic, advanced DRAM, and HBM-related processes all depend on EUV/DUV lithography equipment.
It is reported that a team of strategists at JPMorgan Chase & Co has raised its year-end target for the Stoxx Europe 600 Index from 630 to 680 points.
They emphasize that the rally led by semiconductor equipment giants, profit recovery in the Eurozone, receding geopolitical shocks, and improving market breadth form the macro foundation for European equity revaluation.
If cyclical sectors such as semiconductors, industrials, banking, and consumer goods take turns leading gains, the European market rally would transition from a defensive recovery to a reflationary bull market driven by upward earnings revisions.
Following US memory chip giant Micron Technology Inc's announcement of record capital expenditure and plans by the Korean memory leaders Samsung Electronics Co Ltd and SK Hynix Inc to invest approximately 800 trillion won in building four semiconductor wafer fabs in the southwest region, equipment giants like ASML Holding NV and Applied Materials Inc are entering a new super-cycle of growth driven by massive AI chip and memory chip capacity expansion.
This is also a core reason why Wall Street strategists are becoming increasingly bullish on the European equity market, as it hosts globally leading semiconductor equipment suppliers headquartered in Europe, such as ASML Holding NV, ASM International NV, and BE Semiconductor Industries NV.
Commodity Market Movements and Monetary Policy Shifts
In commodity markets, gold extended its gains, rising 1.2% to around $4,170 per ounce, its highest level in nearly two weeks.
This followed a significantly weaker-than-expected US non-farm payrolls report on Thursday, which led money market traders to drastically scale back hawkish expectations for Federal Reserve rate hikes this year.
This non-yielding metal becomes more attractive when interest rates are lower.
Investors and interest rate futures traders have also significantly reduced their bets on Fed rate hikes this year.
Expectations in the futures market have sharply contracted, with the anticipated number of hikes by the end of 2026 cut from three to just one, and the initial timing for a hike pushed back from the previously most aggressive forecast of July to December or even early next year.
The prospect of looser monetary policy also weighed on the US dollar index, which is heading for its worst weekly performance since May.
Meanwhile, the Japanese yen swung wildly amid heightened speculation that intervention actions by Japanese authorities to support the currency might be less predictable.
In recent days, market fears that persistent inflationary pressures would leave the Fed no choice but to tighten policy have eased, primarily due to a significant pullback in oil prices following a US-Iran peace agreement and an unexpectedly sharp slowdown in US labor market growth.
The market-implied timing for the first fully priced 25-basis-point Fed rate hike has been pushed back significantly from July to December.
"Unless and until we see clearer data and signs that the energy price surge has fed into underlying inflation, we believe the Fed will adopt a relatively cautious approach on policy tightening rather than pivoting to a hiking stance," noted Matthew Ryan, Head of Market Strategy at Ebury.
Brent crude futures stabilized below $72 per barrel as traders weighed the positive prospect of significantly increased oil supply via the Strait of Hormuz against ongoing negotiations between the US and Iran.
Concurrently, strategists at Bank of America Corp noted that the latest compiled market flow data shows that valuation tension around the AI theme has led investors to pull money from US stocks at the fastest pace since March.
A team led by well-known Wall Street strategist Michael Hartnett wrote in a report citing EPFR Global data that US equity funds saw outflows of $17.2 billion in the week ending July 1.
Investors instead moved into some international equities, with Japanese stock markets attracting $1.9 billion in inflows, the largest in seven weeks.
Narrative of AI Computing Glut Recedes; Capital Returns to AI Infrastructure
In European markets, the Stoxx Europe 600 Index closed up 0.7%, hitting an intraday record high of 652.35 and posting its best weekly performance since mid-May.
Germany's DAX index also gained 0.8%, refreshing its historical peak.
More significantly, capital is returning to the AI computing infrastructure theme, which is why the European semiconductor equipment and materials supply chain showed clear upward momentum.
Coupled with SK Hynix Inc's closing gain of about 10.9% and Samsung Electronics Co Ltd's rise of about 8.2%, directly repairing the panic from the previous day's memory stock plunge, the KOSPI Composite Index closed nearly 6% higher.
This highlights that global capital has not abandoned the AI computing hardware infrastructure theme.
Instead, against a macro backdrop of significantly weaker non-farm payrolls data, a notable decline in oil prices, and a comprehensive delay in market rate hike expectations, investors are buying back into the "true beneficiaries of AI capital expenditure."
The increasing leverage, crowded positioning in the AI semiconductor trade theme, and escalating pricing pressures for consumer electronics leaders like Apple Inc, accompanied by the Philadelphia Semiconductor Index once falling 7.9% in a single day and experiencing multiple swings exceeding 5% within a month, underscore that the AI computing power industry chain has entered a phase of high volatility, extreme leverage and crowded bullish positions, and high pressure to meet expectations.
This, combined with Meta's shift towards selling computing resources, is why some institutional investors have recently begun emphasizing overly pessimistic bearish narratives like "the AI semiconductor trading frenzy has peaked" or "the AI bubble is gradually bursting."
However, the prominent investment firm Nomura released a report on Wednesday refuting the "semiconductor peak theory."
The key to Nomura's rebuttal is not simply stating that AI chips will continue to rise, but pointing out that AI cloud infrastructure demand is shifting from a single-point GPU shortage to a systemic component mismatch.
According to Nomura's research framework, AI server revenue is expected to grow 78% and 76% in 2026 and 2027, respectively.
The number of global data center projects is expected to increase from 240 to 280, with about 50 gigawatt-scale projects.
New computing power deployment in 2027 is projected at 32GW, with visibility for 23GW already in 2028.
However, the real bottlenecks are spreading from GPU capacity and Taiwan Semiconductor Manufacturing Co Ltd's CoWoS advanced packaging to wafer-level substrates, AI PCBs, copper-clad laminates, electronic fabric, MLCCs, glass substrates/ABF substrates, IC substrates, high-end capacitors, power management chips, and high-speed optical interconnect components for data centers.
From the perspective of SemiAnalysis, Meta's move to sell AI computing resources and NVIDIA Corp's new "computing power for revenue share" model form highly consistent positive signals for the AI computing power industry chain.
AI computing demand remains strong; what is truly scarce are GPUs/ASICs/TPUs, DRAM/NAND/HBM memory components, power resources, liquid cooling equipment, network infrastructure, and even the complete package of data center campus delivery capabilities and low-cost financing channels, including data center CPUs, high-speed optical interconnect systems, and data center transformer systems.
A newly released research report from the globally renowned firm IDC shows that the world's highest-valued company, the AI chip leader NVIDIA Corp, has for the first time become the largest supplier in the global data center Ethernet switch market by revenue.
IDC's latest report aligns with the views of Wall Street giants like Morgan Stanley, Goldman Sachs Group Inc, and Bank of America Corp, indicating that leaders like NVIDIA Corp in the AI computing power chain are expanding their reach from "single-point control of GPU/AI chips" to a systematic, closed-loop "AI factory" system encompassing GPU rack clusters, networking, DPUs, optical interconnect systems, software ecosystems, and data center power chains.
Morgan Stanley stated that the AI computing arms race has entered a system-level expansion phase.
The firm has significantly raised its 2026 capital expenditure forecast for US mega-cap tech giants from $433 billion a year ago to $805 billion.
Capital expenditure for 2027 is expected to reach $1.1 trillion, up from a previous forecast of $950 billion.
An investment strategist team led by Goldman Sachs derivatives expert Brian Garrett noted in a recent report that investors are reducing their exposure to the "Magnificent Seven" tech giants.
The market continues to actively reward tech companies that are "profiting handsomely from AI capital expenditure," such as semiconductor firms and other beneficiaries in the AI computing infrastructure chain.
Goldman Sachs' second-half investment outlook indicates the firm predicts "tech giants will continue to fall out of favor, while the semiconductor sector continues to reign supreme."
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