That’s The Takeaway from this morning’s Brief, which you can do register to receive in your inbox every morning along with:
The extension of the stock market rally is yet to come as investors continue to pile into (almost) everything AI touches.
Elon Musk revealed earlier this week that Super Micro ( SMCI ) will provide hardware for the supercomputer his AI startup is building. This caused a surge in the stock.
When the CEO of Dell ( DELL ) said his company would build an “AI factory” for Musk’s xAI in partnership with Nvidia ( NVDA ), its stock also rose.
And while the jumps in both names were short-lived, their performance this year and the response to Musk’s one-word tweet are reminders that what he says matters to a lot of people, and that anything related to AI will push markets around.
So far this year, SMCI is up over 200%. Dell, which for some resembles a PC 1.0 world, has seen its stock nearly double.
It doesn’t take a contrived plan or a sideways approach to take advantage of Wall Street’s excitement around AI technology. The main driver of 2024’s seemingly unstoppable run is the earnings potential of the Magnificent Seven, which includes Nvidia, Tesla and the platform giants.
Citi analysts, who earlier this week raised their year-end S&P 500 target to 5,600, noted that more than two-thirds of the stock market’s gains so far have flowed from the Big Seven.
And adding Elon to the mix certainly doesn’t hurt.
Super Micro’s news has a clear Musk dimension, and part of the multi-CEO’s dynamism is that his businesses cross industries and are themselves interconnected. But since Tesla is Musk’s only public company, most investors can access his other ventures only indirectly. If you can’t shop at xAI, why not shop some of its suppliers?
A similar dynamic is at play within the world of AI.
The AI rally extends beyond device manufacturers. Investors trying to create a makeshift Musk basket of related tech properties are doing the same with Nvidia. Because it’s not just Big Tech platforms producing apps and productivity software that are fueling the AI boom. There’s a whole ecosystem out there.
Powering the computer systems that train and run AI systems requires vast amounts of energy. Utilities are riding the AI wave.
Amazon ( AMZN ), Alphabet ( GOOGL ), Microsoft ( MSFT ) and Meta ( META ) are expected to spend a combined $200 billion this year on cloud and AI investments, which will include building and operating data centers. On the other hand, energy demand from US data centers is expected to double by 2030, due in part to AI, according to estimates by consulting firm McKinsey.
Getting in early is good. But the artificial intelligence frenzy is proving that going in at all is more than enough.
Hamza Shaban is a reporter for Yahoo Finance covering markets and economics. Follow Hamza on Twitter @hshaban.
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