Dow Futures remain largely stable, fluctuating around the neutral point. Artificial intelligence chip gear supplier Applied Materials provides robust fourth-quarter revenue guidance; however, the stock faces heightened expectations from Wall Street. Meanwhile, shares of Semiconductor Manufacturing International Corp experienced a notable increase following the Chinese chip foundry’s announcement of a significant rise in second-quarter revenue and profit.
Dow futures exhibited a lacklustre performance on Friday, as investors analysed the implications of easing inflation data alongside a series of earnings reports from the technology sector. By 03:18, the futures contract for the Dow had decreased by 72 points, or 0.1%, while the S&P 500 and Nasdaq 100 futures remained largely stable. The primary indices on Wall Street recorded substantial increases on Thursday, bolstered by a series of positive earnings reports from companies benefiting from the artificial intelligence surge. While shares of companies such as Cisco Systems and Cerebras Systems declined following their quarterly returns, which did not meet elevated expectations, management teams conveyed an optimistic outlook regarding the macroeconomic environment, analysts noted in a report. Sandisk also presented a promising, AI-driven long-term outlook during an analyst meeting, according to the strategists. The memory chipmaker has projected revenue growth in the mid-to-high teens percentage range for the fiscal years 2028 to 2030. Meanwhile, a measure of producer price growth moderated on an annualised basis in July, further strengthening expectations that the Federal Reserve will choose to maintain interest rates at their current levels during its September policy meeting, rather than increase borrowing costs.
Applied Materials projected fourth-quarter revenue that exceeded expectations, indicating that the chip equipment manufacturer is expecting to continue reaping benefits from the AI infrastructure boom. The AI era’s seemingly insatiable demand for advanced chips has propelled semiconductor equipment suppliers such as Applied Materials, as these processors necessitate an increased supply of silicon wafers and sophisticated manufacturing tools. In light of current circumstances, Applied Materials has projected that fourth-quarter revenue will be approximately $10.25 billion, with a variance of plus or minus $500 million. The company indicated its intention to enhance manufacturing capacity in order to meet surging demand. However, similar to the situation faced by other firms exposed to AI earlier this week, this has resulted in exceedingly high estimates from Wall Street that have eclipsed even strong financial guidance. Shares in Applied Materials experienced a decline exceeding 5% during after-hours trading on Friday.
Elsewhere, shares of Semiconductor Manufacturing International Corp experienced a notable increase following the Chinese chip foundry’s announcement of a significant rise in second-quarter revenue and profit. Concurrently, broader Asian chipmakers also saw gains, buoyed by improving demand prospects. SMIC reported a 36.1% increase in revenue year-on-year, reaching $3.01 billion for the quarter ending in June. Meanwhile, profit attributable to shareholders experienced a remarkable surge of 261.7%, amounting to $479.2 million. Gross margin increased to 25.3% from 20.4% a year prior, supported by elevated average selling prices and a more advantageous product mix. Wafer shipments experienced a year-on-year increase of 20.1%. Capacity utilisation improved to 93.7%, up from 92.5% a year earlier. SMIC anticipates that its revenue for the third quarter will increase by 2% to 4% on a sequential basis, with gross margin projected to be between 26% and 28%. The company indicated that the momentum associated with AI and its spillover effects would persist in bolstering widespread demand for chip manufacturing in the latter half of the year, while it intends to expedite the qualification of new capacity.
Oil prices advanced on Friday, positioning themselves for their first weekly gain in three weeks, as uncertainty surrounding the U.S.-Iran conflict and Gulf supplies continued to maintain a risk premium. However, crude reduced some of its weekly gains following adjustments to demand forecasts by key industry bodies for this year, while an unexpected and significant increase in U.S. inventories also unsettled markets. Brent crude futures, the global oil benchmark, experienced an increase of 1.6%, reaching $88.43 per barrel, while U.S. West Texas Intermediate crude futures saw a rise of 1.9%, climbing to $82.72 per barrel as of 03:36. Brent and WTI futures experienced an increase of approximately 5% this week. The U.S. and Iran have presented opposing assertions regarding control over the Strait of Hormuz, resulting in ambiguity surrounding the status of shipping in this critical waterway. Earlier in the week, Iran asserted its complete control over the waterway, declaring it closed to commercial shipping. In contrast, the U.S. maintained that it continued to facilitate sailings thru this critical conduit. Comments from U.S. Treasury Secretary Scott Bessent contributed to the prevailing cautious sentiment, as he stated in an interview that the U.S. would impose “measures like have never been seen in the history of economic isolation on a country” against Iran.
Workday shares surged 25% on Thursday, following a Reuters report that private equity firm Silver Lake is in discussions to acquire the human resources and financial management software company. Recent reports indicate that Silver Lake and Workday have engaged in discussions regarding a potential deal in recent months. However, these talks are still ongoing, and there is no assurance that an agreement will be reached. The potential acquisition would assign a valuation to Workday that exceeds its existing market capitalisation of $43 billion, positioning it among the most significant software buyouts recorded in history. Workday has experienced a decline in its shares of approximately 15% year-to-date and a more significant drop of over 40% from its peak in 2024. Neither Silver Lake nor Workday provided comments regarding the reported discussions, as noted.
