Nvidia surges on AI boom, causing Wall Street rally
Nvidia's stock price surged Thursday after delivering another blowout quarter, setting off a rally in other technology companies that carried Wall Street to another record high.
The chipmaker, a central player in the boom surrounding artificial intelligence, reported scorching demand for its semiconductors.
The S&P 500 rose 105.23 points, or 2.1%, to 5,087.03, an all-time high. The Nasdaq rose 460.75 points, or 3%, to 16,041.62.
The Dow Jones Industrial Average, which has a smaller weighting in tech stocks, jumped 456.87 points, or 1.2%, to 39,069.11. That marks its first close above 39,000.
Nvidia soared 16.4%, leading the gains for tech companies and the market. Its stock has tripled over the past year thanks to a surge in investor enthusiasm for artificial intelligence. Synopsis, which makes software used to test and develop chips, rose 6.9% after raising its profit forecast.
Other chipmakers and companies involved in the chipmaking industry also gained ground. Advanced Micro Devices rose 10.7% and Lam Research added 4.7%.
Technology stocks have been the driving force behind the market's rally that started in October. Solid earnings from some of the biggest names in the sector are helping justify and reinforce those gains.
“Investors are still wondering, will the market top out or broaden out,” said
Sam Stovall, chief investment strategist at CFRA. “As of now, investors are basically saying I'm going to let this market take me where it wants to go, and right now that's higher.”
Overnight, Japan's Nikkei 225 surged to an alltime high. Record gains in corporate earnings have enhanced the appeal of shares in Japanese companies, along with the weakness of the Japanese yen against the U.S. dollar.
On the losing end, electric truck and SUV maker Rivian tumbled 25.6% after it reported another loss and issued a weaker-thanexpected production outlook. Lucid, another electric vehicle maker, slid 16.8% after it missed Wall Street sales forecast and also gave a weaker production estimate than analysts had called for.
Online craft marketplace Etsy fell 8.4% after it missed Wall Street's profit forecast by a wide margin.
AT&T fell 2.4% after an outage knocked out cellphone service on its network across the U.S. for hours.
Wall Street expects just under 4% growth for earnings in the overall S&P 500 during the fourth quarter. The communication services sector, which includes Google's parent Alphabet, is expected to report 45% growth. Information technology companies, which include Nvidia, are expected to notch 22% growth.
“The near-term momentum in AI-related stocks is likely to continue,” said Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management.