Broadcom and Ciena were among the standout market cap movers on Thursday, as a wave of positive earnings and analyst upgrades propelled the technology sector higher. Broadcom’s shares jumped more than 8% after the chipmaker reported quarterly revenue that exceeded analyst expectations, driven by robust demand for its AI-related networking and custom chip products. The rally added approximately £40bn to Broadcom’s market capitalisation, making it one of the biggest single-day gainers on the S&P 500.
Ciena, the US-based optical networking company, also saw its market cap rise sharply after an analyst at JPMorgan upgraded the stock from ‘neutral’ to ‘overweight’, citing accelerating demand for high-speed data infrastructure. Shares in Ciena climbed over 6% on the day, pushing its valuation above £9bn. The moves reflect growing investor confidence in companies supplying the backbone for artificial intelligence and cloud computing.
The broader market responded in kind. The tech-heavy Nasdaq Composite closed 1.2% higher at 16,742 points, while the S&P 500 added 0.6% to reach 5,412. In London, the FTSE 100 edged up 0.3% to 8,228 points, partly mirroring the positive tone from Wall Street. UK-listed technology stocks such as Sage Group and Aveva Group also gained, though to a lesser extent.
For UK investors and pension holders, the rally in US tech names is significant. Many British pension funds hold significant allocations to US equities through global tracker funds, meaning a sustained rise in companies like Broadcom and Ciena could boost returns. However, analysts caution that valuations remain elevated. ‘The AI trade is still driving sentiment, but investors should be mindful of interest rate risk and potential regulatory headwinds,’ said Sarah Jenkins, a senior market analyst at Hargreaves Lansdown.
The sector’s strength also underscores the growing importance of infrastructure spending. As telecom operators and cloud providers upgrade networks to handle AI workloads, companies supplying optical components and custom chips are well-positioned. Ciena’s upgrade reflects this trend, with the analyst noting that ‘optical networking is becoming a bottleneck for AI data centres, and Ciena is a key beneficiary.’
Looking ahead, market participants will focus on upcoming earnings from other semiconductor firms and any signals from the Federal Reserve on interest rates. A continued dovish stance could further support growth stocks, while any hawkish surprise might reverse Thursday’s gains.
Source: Reuters, Bloomberg, JPMorgan research note