Global Market Optimism Boosts Israeli Stocks Amid Strong AI Earnings and Mixed Bond Yields
The Israeli stock market is set to open positively, buoyed by global optimism and a surge in artificial intelligence (AI) sector stocks following strong earnings reports from Nvidia and Salesforce. Nvidia reported second-quarter revenues of $96.2 billion, surpassing analyst expectations, and forecasted third-quarter revenues of $108 billion, driving its stock up over 4% in after-hours trading. Salesforce also exceeded forecasts with $11.35 billion in revenue and announced a strategic AI partnership with Anthropic. These results helped ease investor concerns about an AI bubble.
Dual-listed Israeli stocks are expected to return from Wall Street to the Tel Aviv Stock Exchange with a slight positive impact on the TA-35 index, led by chipmakers Tower and Nova, and technology firms Te'at Technologies and AudioCodes. However, Ormat Technologies and other stocks like Camtek and Palo Alto are expected to weigh on the market with negative gaps. Yesterday, the TA-90 index rose about 1.1%, while the TA-35 edged up 0.1%, driven by gains in the biomedical, communication, and insurance sectors. Energy stocks and companies like Fattal, Lahav Fox, and Vishor Globaltech also attracted attention. Conversely, cleantech stocks declined, with Rimon falling 15%.
In the bond market, US Treasury yields remained stable with the 10-year at 4.656% and 30-year at 5.183%, amid efforts by the US Treasury to curb long-term rate increases through increased bond buybacks. Analysts caution that without significant fiscal easing, yields may not decline substantially before the US midterm elections. In Israel, government bond yields showed mixed movements with slight declines across maturities.
The shekel strengthened slightly against the dollar to about 2.97, supported by falling oil prices amid diplomatic talks in the Middle East suggesting a possible reopening of the Strait of Hormuz. Brent crude fell 0.7% to $87.24 per barrel, marking four consecutive days of declines. Despite easing oil prices, US inflation data showed the Personal Consumption Expenditures (PCE) index rose 0.2% in July, above expectations, keeping pressure on the Federal Reserve to consider further rate hikes.
Meta’s stock declined 6% over the past month due to heavy AI infrastructure investments, but analysts see potential upside of over 50% by monetizing excess computing capacity. Meta aims to reach 14 gigawatts of data center capacity by 2027, with the possibility of leasing out 1 gigawatt to external clients, potentially generating $11 to $22 billion annually. CEO Mark Zuckerberg confirmed interest in selling computing power but emphasized prioritizing internal AI product development.