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?
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical TensionThe main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
What's at Stake for Alphabet as DOJ Eyes Google's ChromeAlphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical Tension
The main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
What's at Stake for Alphabet as DOJ Eyes Google's Chrome
Alphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
-
Stock Market Today: Nasdaq Jumps Ahead of Nvidia EarningsIt was a mostly positive start to a new week of pricing in more Donald Trump.
-
Stock Market Today: Stocks Drop as Post-Election Party EndsIt was a red finish on Wall Street Friday with tech stocks selling off ahead of Nvidia's upcoming earnings event.
-
Stock Market Today: Stocks Slip After Powell Talks Rate CutsThe main indexes closed lower Thursday after Fed Chair Powell said there's no rush to cut rates.
-
Stock Market Today: Markets Waver as Inflation Continues to EaseStocks gave up early gains as waning consumer price inflation leaves rate-cut bets essentially unchanged.
-
Nvidia Earnings: Updates and CommentaryNvidia earnings have become a key event on Wall Street which makes the AI bellwether's next report, due out after the November 20 close, must-see viewing for investors.
-
Stock Market Today: Stocks Retreat on Renewed Inflation, Interest Rate QuestionsStocks were lower and yields were higher on Tuesday, with markets reflecting the uncertain transition from campaign promises to real-world policies.
