A recovery in artificial-intelligence stocks is providing a boost to the U.S. market this Wednesday.
The S&P 500 climbed 0.9 per cent, putting it on track for its third gain in four days following last week’s sharp decline, which was driven by concerns over a potential slowdown in AI data center construction. While the Nasdaq composite rallied 1.4 per cent, broader market performance outside of the AI sector remained lackluster. The Dow Jones Industrial Average slipped 56 points, or 0.1 per cent, by 9:35 a.m. Eastern time.
One of the companies at the heart of the AI sector’s recent volatility helped lead the market higher. increase the cost of borrowing
CoreWeave CEO Michael Intrator said his company has roughly US$9 billion in customer prepayments and deposits expected in the next three months, along with otherng it’s making progress toward being able to self-fund its business
Furthermore, there has been growing apprehension about a potential industry-wide slowdown, fueled by long-standing questions regarding whether AI will generate sufficient productivity and profit to justify massive capital investments.
These concerns intensified following significant Democratic victories in last week’s U.S. midterm elections. The prevailing fear is that Democratic control of statehouses nationwide could result in new restrictions on the development of AI data centers and the industry as a whole.
However, CoreWeave indicated that momentum remains strong, at least for the time being, and it raised its revenue forecast for the year. The updated guidance exceeded analyst expectations.
Naturally, significant challenges persist for both CoreWeave and the broader AI sector. Nevertheless, the company’s report helped stocks across the industry recover some of their recent losses.
Micron Technology, a computer memory provider, rose 5.6 per cent. Broadcom gained 5.6 per cent, while GE Vernova, which supports the power needs of AI data centers, increased 3 per cent.
Even Nvidia shares climbed 2.9 per cent.
The chipmaker that became the face of the AI boom has been sliding recently for reasons unrelated to the rest of the industry. Its board is currently investigating CEO Jensen Huang after he admitted to a relationship with a businesswoman who allegedly provided intelligence and advanced chips to China.
Outside of the technology sector, Fossil Group soared 30.9 per cent after the retailer of watches and handbags reported quarterly profits that beat analyst estimates. The company also increased its revenue outlook for the year.
Trading elsewhere on Wall Street was mixed, with decliners outnumbering gainers within the S&P 500. StubHub shares dropped seven per cent after the company reported summer results that fell short of analyst projections.
Stocks faced additional pressure from rising oil prices, which recovered some of their losses from earlier in the week.
The price of a barrel of Brent crude rose 1.2 per cent to $92.63. It remains near the midpoint of its $72 to $120 range, which has been in place since the conflict with Iran drove oil prices and inflation significantly higher earlier this year.
While higher oil prices typically push bond yields upward, the U.S. bond market is closed today in observance of Veterans Day.
In international markets, indexes across much of Asia and Europe trended higher.
South Korea’s Kospi jumped 2.6 per cent, marking one of the largest gains globally, while Hong Kong’s Hang Seng was an outlier, falling one per cent.
Stocks in Shanghai rose 0.5 per cent as China’s major online shopping event, Singles Day, kicked off on Wednesday. The resulting sales data will serve as a barometer for consumer spending in the world’s second-largest economy.
