Nvidia Corp. President and CEO Jen-Hsun Huang speaks at the company’s event at the Mobile World Congress Americas in Los Angeles, California, USA on Monday, October 21, 2019.
Patrick T. Fallon | Bloomberg | Getty Images
forget about debt ceiling. Tech investors are in buy mode.
of Nasdaq The Composite Index posted its fifth straight week of gains on Friday, gaining 2.5% over the past five days and up 24% so far this year, well ahead of other major U.S. indexes. The S&P 500 is up 9.5% year-to-date, while the Dow Jones Industrial Average is down slightly.
Excitement Surrounding Chip Makers NVIDIA’s blow out earnings report The company’s leadership position in artificial intelligence technology drove the week’s gains, but investors also microsoft, meta and alphabeteach has its own AI story to tell.
and, fostering optimism Lawmakers are close to agreeing to raise the debt ceiling, and the Federal Reserve it may be late The pace of rate hikes is starting to show what the stock market will do this year I can’t believe it’s 2022 It’s more like the technology-filled happy decade that preceded it.
“This market has been home to focus on mega-cap tech stocks,” Victoria Green, chief investment officer at G-Squared Private Wealth, said in an interview on CNBC’s Worldwide Exchange Friday morning. Told. “You can’t deny the potential of AI, and you can’t deny the earning power these companies have,” she said.
At the beginning of the year, the key technology themes were: dismissal and reduce costs. Meta, Alphabet, Amazon Microsoft and Microsoft have cut thousands of jobs in the wake of 2022 earnings growth and weak stock prices. In their earnings report, they emphasized their efficiency and capabilities. “Do more with less effort” It’s a theme that resonates with the Wall Street crowd.
But as companies show off real-world applications of long-hyped technologies, investors are shifting their focus to AI. OpenAI has seen explosive growth since it released chatbot ChatGPT last year, and its biggest investor, Microsoft, Incorporate core technology For as many products as possible.
Meanwhile, Google touts its rival AI model as: every occasionMeta CEO Mark Zuckerberg I would rather tell shareholders about his company’s AI advancements, rather than his company’s AI advancements outflow of money Metaverse efforts.
Enter Nvidia.
The chipmaker, best known for the graphics processing units (GPUs) that power advanced video games, is riding the AI wave.stock Soared 25% this week Better-than-expected first-quarter earnings pushed the company’s market capitalization to a record high, nearing $1 trillion.
Nvidia’s stock is up 167% this year, topping all companies on the S&P 500. The next top three companies in the index are also tech companies. Advanced Micro Devices and Salesforce.
of Nvidia story Revenue in the latest quarter was down 13% year-over-year, driven by a 38% decline in the gaming division, so it’s forward-looking. But the company’s revenue forecast for the quarter beats Wall Street’s forecast by about 50%, and CEO Jensen Huang said NVIDIA expects “demand to skyrocket” for its data center products. There are,” he said.
Cloud vendors and internet companies are buying up GPU chips and using those processors to train and deploy generative AI applications like ChatGPT, according to Nvidia.
“I think at this point in the cycle it’s really important not to go against the consensus,” said Brent Braiselin, an analyst who covers cloud and software companies at Piper Sandler, on Friday’s CNBC show “Squawk on Squawks.” said in an interview with The Street.
“When it comes to AI, the consensus is that big things get even bigger,” Bracerin said. “And I think it will continue to be the best way to stay on top of AI trends.”
Microsoft, which Bracerin recommends to buy, is up 4.6% this week and is up 39% for the year. Meta is up 6.7% for the week, more than doubling in 2023 after losing nearly two-thirds of its value last year. Alphabet is up 1.5% this week, up 41% for the year.
The biggest drag on tech stocks last year was consistent central bank rate hikes.The increase will continue through 2023, with the Federal Fund’s target range of Increased from 5% to 5.25% in early May. But some members at the last Fed meeting said weaker economic growth would eliminate the need for further tightening, according to minutes released Wednesday.
Less aggressive monetary policy is seen as a bullish signal for tech and other riskier assets, which typically outperform in a more stable interest rate environment.
Still, some investors fear tech stocks have gone too far given the remaining vulnerabilities in the economy and government. As the Treasury Department’s June 1 deadline approaches, a split in Congress has made a deal to raise the debt ceiling more difficult. Republican negotiator Garrett Graves of Louisiana told reporters on Friday afternoon at the Capitol that “we continue to have a big problem that we haven’t been able to bridge.”
Treasury Secretary Janet Yellen said late friday The U.S. likely has enough headroom to postpone a possible default until June 5, the people said.
Ari McCartney, managing director of UBS Private Wealth Management, told CNBC’s “Squawk on the Streets” on Friday that the recent rally in tech stocks “probably takes some of it off the table. The time has come,” he said. Her group has spent a lot of time observing the venture market and where deals are taking place, and she has noticed some definite bubbles, she said.
“You are either AI or you are not,” McCartney said. “We really need to be prepared to see what that means if we don’t get the perfect debt ceiling, if we don’t get the perfect landing, because at this kind of level, the US is going to have a debt ceiling. Everything is lofty and seems like a very dangerous place when you consider the risks.”
