European chip stocks rally on Nvidia boost

European semiconductor stocks soared on Thursday after Nvidia reported a multi-billion revenue beat and booming adoption of artificial intelligence chips.

Nvidia rocketed as much as 28% on Wall Street in afterhours trading on Wednesday. That lifted the Silicon Valley company's market value by about $200 billion, extending its lead as the world's most valuable chipmaker.

The rally spread to European chip stocks, driving ASM International, BE Semiconductor and ASML Holding up more than 5% to lead gainers on the STOXX Europe 600 Technology index.

"In Europe, as we have argued consistently, semicaps are the beneficiaries of AI adoption. Specifically, we see ASMI and ASML as beneficiaries of higher orders," said Bank of America Global Research analysts led by Didier Scemama.

The European chip companies all make equipment used by Taiwan's TSMC, the company which makes Nvidia's chips. ASM International makes atomic layer deposition (ALD) tools, ASML makes lithography machines that create the circuitry of chips, and BE Semi makes advanced packaging equipment.

BofA analysts said AI would be a key catalyst for these companies. They added that other beneficiaries included Technoprobe, Comet and Siltronic, along with Infineon and STMicro.

US firms related to AI also rallied in afterhours on the back of Nvidia's strong report. Rival chipmaker Advanced Micro Devices jumped 10%. Microsoft and Google parent Alphabet, which are both rushing to incorporate generative AI into their search platforms, each rose about 2%.