Stocks closed higher Thursday thanks to a big rally in the technology sector. Advanced Micro Devices (AMD, +9.9%) was one of the biggest gainers after the chipmaker unveiled its new artificial intelligence (AI) chips that are expected to provide a major boost to its top line.
Specifically, AMD said it anticipates these new AI chips to add $400 million to fourth-quarter revenue and more than $2 billion in its upcoming fiscal year. Additionally, Advanced Micro Devices CEO Lisa Su said the market for AI chips in data centers could hit $400 billion by 2027. This is well above other forecasts. Research firm Gartner, for instance, predicts global revenue from AI chips to reach $119 billion by 2027.
"We think part of what makes a good stock is the ability to dream – and this certainly fits the bill as AMD is still a fairly small company in very large markets," says UBS Global Research analyst Timothy Arcuri. "The stock remains one of our top ideas heading into 2024 and we reiterate our Buy."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Alphabet adds nearly $90 billion in market cap on Gemini reveal
AMD wasn't the only tech stock rallying on AI news today. Alphabet (GOOGL) surged 5.3% – adding $88 billion in market cap along the way – after the tech giant's subsidiary Google unveiled Gemini, its new AI model. "Google has been under pressure to catch up with OpenAI's ChatGPT and its advanced AI capabilities," writes Tech Radar's Alex Blake, adding that Gemini is Google's "most powerful AI brain so far."
CFRA Research analyst Angelo Zino (Buy) says that while he believes Google "may still be a step behind Microsoft/OpenAI, AI advancements are moving incredibly fast."
Alphabet is one of the Magnificent 7 stocks, a group that includes Amazon.com (AMZN, +1.6%), Meta Platforms (META, +2.9%), Microsoft (MSFT, +0.6%), Nvidia (NVDA, +2.4%) and Tesla (TSLA, +1.4%). Massive gains this year for the mega-cap tech stocks have helped the market cap-weighted S&P 500 (+19.4% for the year-to-date) and Nasdaq Composite (+36.9%) deliver outsized returns compared to the price-weighted Dow Jones Industrial Average (+8.9%).
As for today's action, the S&P 500 rose 0.8% to 4,585, while the Nasdaq jumped 1.4% to 14,339. The Dow, on the other hand, added a more modest 0.2% to end at 36,117.
Jobs report is up next
Looking ahead, all eyes are on tomorrow's November jobs report. This morning, data from the Labor Department showed initial jobless claims edged up by 1,000 last week to 220,000.
"Tomorrow's jobs report is likely to provide additional indications of the labor market softening, a welcome sign for employers who have faced challenges with wage pressures and staffing with the right candidates," says José Torres, senior economist at Interactive Brokers. "Its impact on markets, however, will depend on whether investors view the data as a stepping stone to a March rate cut and soft landing, or an adverse effect on consumer spending and a sharper economic slowdown."
Related content
- Will SCOTUS Strike Down Wealth Taxes?
- The Earnings Recession Is Over
- Amazon vs Walmart: Who Has the Cheapest Grocery Prices?
-
Sam's Club Plans Aggressive Expansion: Discover Its New LocationsSam's Club expansion plans will open up to 15 new stores each year. Learn where they plan to open in 2025.
-
What Is the Buffett Indicator?"It is better to be roughly right than precisely wrong," writes Carveth Read in "Logic: Deductive and Inductive." That's the premise of the Buffett Indicator.
-
Stock Market Today: Stocks Surge to Close a Volatile WeekIt was another day with a week's worth of both news and price action, but it ended on a strongly positive note.
-
Stock Market Today: Uncertainty Proliferates: Dow Loses 1,014 PointsWeaker-than-expected consumer inflation data wasn't enough to stabilize sentiment during another volatile day for financial markets.
-
Stock Market Today: Tariff Pause Triggers 3,000-Point Dow RallyThe bond market is sending concerning signals as the Trump administration executes its rapid reordering of global trade relationships.
-
Stock Market Today: Tariff Talks Drive Another Up-and-Down DayTrade war negotiations are happening, but the "fear gauge" is gyrating, and investors, traders and speculators are still searching for signs of a bottom.
-
Stock Market Today: Trump Pushes Dow Into 2,600-Point SwingTariffs and trade war weigh on prices across global financial markets, with little light at the end of the tunnel.
-
Stock Market Today: Dow Drops Another 2,231 Points to Hit a CorrectionThe Nasdaq Composite, meanwhile, entered a new bear market with its latest slide.
-
Stock Market Today: Dow Dives 1,679 Points on Trump Tariff ShockU.S. stocks lost roughly $3.1 trillion in market cap on Thursday – the biggest one-day decline since the start of the COVID-19 pandemic in March 2020.
-
Wall Street Is Worried About Apple Stock. Should You Be Too?Analysts expect Trump's sweeping tariffs to have an outsized impact on Apple stock. How concerned should investors be?
