Wall St. gains as Nvidia sparks rush for AI stocks
STORY: The Nasdaq ended sharply higher on Thursday after a blowout forecast from Nvidia sent the chipmaker's stock soaring and fueled a rally in AI-related firms.
The Dow ended down fractionally, the S&P 500 gained just under one percent while the tech-heavy Nasdaq jumped nearly a percent and three quarters.
Nvidia surged 24% to a record-high close after the world's most valuable chipmaker forecast quarterly revenue 50% higher than estimates and said it was ramping up supply to meet demand for its artificial-intelligence chips.
Investors exchanged almost $60 billion worth of Nvidia's shares, accounting for a fifth of all trading in S&P 500 stocks during the session, according to Refintiv data.
Fellow chipmakers also rose, along with heavyweight AI players Microsoft and Alphabet.
But Eric Lynch, Managing Director at Scharf Investments, warns investors that in the fast-changing world of tech, even the biggest names may eventually become vulnerable.
“Like prior technology evolutions or revolutions, you have winners and losers, and I think what we need to be careful about what investors need to be careful about right now is not everybody wins. [FLASH] It remains to be seen whether, you know, Amazon and Apple and Alphabet and those types of large mega cap IT names that have been going up in tandem with Nvidia year-to-date will actually be aided by AI or disrupted by it.”
Intel, which investors view as lagging in the AI race, dropped 5.5%.
In other movers, shares of Ralph Lauren climbed more than 5% after the luxury retailer beat profit estimates.
Best Buy rose 3% following upbeat quarterly earnings, while Dollar Tree tumbled 12% after cutting its annual profit outlook.
Meanwhile, investor angst over the debt ceiling talks may have eased a bit as Reuters reported that President Joe Biden and top House Republican Kevin McCarthy edged closer to deal.