Asian stocks rose on Thursday after U.S. technology firms outlined significant capital spending plans that are likely to benefit chipmakers in the region, while the escalating war in the Middle East pushed oil prices to six-week highs.
Earnings from Alphabet GOOGL.O and Tesla TSLA.O showed no slowdown in the vast spending on AI infrastructure, with the search giant raising its capital expenditure plans for the year.
A lot of the spending is expected to boost Asian chipmakers. South Korea's KOSPI .KS11 surged more than 3%, led by SK Hynix 000660.KS and Samsung Electronics 005930.KS. Japan's Nikkei .N225 was up 0.7%.
Much of the focus this earnings season will be on whether the huge amount of spending on AI is resulting in significant returns, the pace of profit growth and whether the sky-high valuations of some of the firms are warranted.
"For markets, this is not an AI-demand problem; it is an AI-return problem," said Charu Chanana, chief investment strategist at Saxo in Singapore.
"U.S. megacaps may face more scrutiny because they are writing the cheques, while chipmakers, memory suppliers and infrastructure companies get paid earlier in the investment cycle."
MSCI's broadest index of Asia-Pacific shares outside Japan .MISX000S0PUS gained about 1%, set for a 3% rise for the week, snapping a two-week losing streak.
Gary Tan, portfolio manager at Allspring Global Investments, said the key positive for Asia’s chipmakers was that stronger cloud growth was validating higher AI capex, reinforcing that the hyperscaler spending cycle still has legs.
European futures STXEc1, though, pointed to a muted open ahead of a policy decision from the European Central Bank, where the central bank is expected to stand pat but keep its options open for a hike in September in the wake of the Iran crisis.
Nasdaq futures NQc1 dipped 0.1% as investors' attention remains on capital spending plans ahead of earnings from Microsoft, Meta and Amazon next week.
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