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Stocks gained Wednesday thanks in part to another artificial intelligence-powered lift, as optimism emanating from the nascent technology keeps driving equities higher against a suboptimal macroeconomic backdrop.
The Dow Jones Industrial Average, S&P 500 and tech-heavy Nasdaq each rose 1.2% or more Wednesday, just the third time that happened since the beginning of April.
Yet again driving the gains were tech heavyweights, as Tesla (up 4.4%), Nvidia (3.4%), Amazon 1.8%), Meta (1.5%), Alphabet (1.3%), Microsoft (0.9%) and Apple (0.3%) spiked, tacking on a combined $123 billion in market capitalization Wednesday.
Those giants, which have rallied more than $1 trillion year-to-date collectively thanks in large part to the AI boom, offered more fuel for optimistic investors Wednesday, with Amazon announcing AI enhancements to its Alexa devices and Nvidia unveiling a new partnership with ServiceNow to expand generative AI in cloud computing.
Hedge fund billionaire Steve Cohen declared Tuesday he has a “pretty bullish” outlook on the market as a whole thanks to streamlined corporate efficiency from AI, according to Bloomberg.
“I’m making a prognostication: We’re going up,” Cohen said about broad equity prices, explaining increased automation should widen corporate profits in coming quarters.
The S&P is up 9% year-to-date and excitement about what AI could mean for investors is at a fever pitch, but stocks will encounter a “rocky road” later this year, Wells Fargo strategist Scott Wren wrote in a Wednesday note to clients. Wren explained the strong likelihood of the U.S. slipping into a recession and his expectation that companies will fail to deliver on profit expectations thanks to thinner margins as interest rates remain high. Earnings for S&P companies declined by 6.8% year-over-year in the most recent quarter, according to recent Morgan Stanley research.
Tesla, which hosted its annual meeting with shareholders after Tuesday’s market close, posted its second-largest daily stock gain since March, tacking on $25 billion in market value after it said it will advertise its vehicle for the first time and its CEO Elon Musk vowed to remain in charge for the foreseeable future. Musk, who drew the ire of several Jewish civil rights groups this week for touting conspiracies mirroring antisemitic tropes about billionaire George Soros, added the most to his net worth of anybody on earth Wednesday with a $5 billion bump.
Musk holds the second-largest fortune in the world at $181 billion, while Cohen is owner of the planet’s 93rd-largest wealth pile at $17.5 billion. Cohen chairs Point72 Asset Management and owns the New York Mets MLB team.
Since the late 2022 launch of the Microsoft-subsidized ChatGPT generative AI product, AI fever has infected Wall Street; Bank of America strategists dubbed AI the “new electricity” in a March note, projecting it to create massive gains for stocks. A slew of technology companies have revealed their own AI services, but benefitting the most are mega-cap tech stocks like Nvidia, Meta, Alphabet and Amazon, four of the 20 best-performing stocks on the S&P year-to-date.
‘AI Is The New Electricity’: Bank Of America Picks 20 Stocks To Cash In On ChatGPT Hype (Forbes)