Tech stocks bolster Wall Street as Nvidia quells AI growth concerns

NEW YORK: The tech-heavy Nasdaq outperformed peers on Thursday after Nvidia’s blockbuster results reaffirmed the strength of the AI boom and fueled gains in technology stocks.

Nvidia shares jumped 7.5 percent after the chip giant’s robust forecast met lofty investor expectations, bolstering the view that the tech rally still has room to run as companies at the heart of AI buildout continue to deliver impressive growth.

“Nvidia’s results show that the AI boom is not running out of demand… while delivering that growth is becoming more expensive and capital-intensive,” said Lale Akoner, global market strategist at etoro.

Its “ability to raise prices should help margins recover… but it cannot escape supply pressures entirely.”

Nvidia has warned that shortages of memory components could curb the pace of the industry’s growth.

US chip-linked stocks broadly rose, with the semiconductor index adding 1.5 percent.

The S&P 500 Information Technology sector rose 2.6 percent, making it the sole gainer among the S&P 500’s 11 constituents.

Salesforce surged 20.2 percent after raising annual revenue and profit forecasts, and rolling out a new plug-in integrated with Anthropic’s Claude AI models. The stock was the biggest boost to the blue-chip Dow, and was set for its best one-day jump in six years.

CrowdStrike climbed 18 percent after the cybersecurity software provider raised its annual revenue forecast and topped second-quarter earnings estimate.

Both these reports calmed worries that advanced AI tools could upend the traditional software industry, boosting investor appetite for beaten-down software stocks and narrowing the gap with semiconductors, which are seen as the primary beneficiaries of the AI boom.

Other software firms ServiceNow and Palo Alto Networks gained 8.6 percent and 11.5 percent, respectively.

At 11:32 a.m. ET, the Dow Jones Industrial Average rose 171.81 points, or 0.32 percent, to 53,635.69. The S&P 500 gained 44.59 points, or 0.58 percent, to 7,720.29, while the Nasdaq Composite advanced 311.01 points, or 1.19 percent, to 26,441.21.

Moderna dropped 6.8 percent after unveiling a USD2 billion convertible bonds sale, while HP lost 5.2 percent after its PC unit shipments and margins declined in the third quarter.