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?
-
Retire in Italy for Culture and BeautyU.S. citizens retire in Italy for a lifestyle of abundance. If you love history, gastronomy, art and natural beauty, Italy almost always does it better.
-
Markets Are Down: Here's How Your Estate Can BenefitYour estate can benefit from stock market malaise by using several creative tools. Here's how.
-
Stock Market Today: Dow Jumps 674 Points in Friday's Relief RallyThe gains weren't limited to stocks, though, with gold futures closing above the $3,000 per ounce mark for the first time.
-
Stock Market Today: Stocks Drop on Trump's EU Tariff ThreatsThe White House said alcohol imports from the European Union could soon face tariffs of 200%.
-
Stock Market Today: Nasdaq Shines In Volatile SessionIt was another up-and-down day for stocks as market participants weighed encouraging inflation data against the latest tariff headlines.
-
Stock Market Today: Trump Drives Another Up-and-Down DayInvestors, traders and speculators as well as businesses and households continue to adjust to rapidly changing times.
-
Should You Sell Tesla Stock as Elon Unrest Grows?Tesla's CEO is wearing many hats and is managing them "with great difficulty."
-
Stock Market Today: Dow Off 890 Points on Tariff UncertaintyPresident Donald Trump still believes his ever-evolving plan for global trade will be "great for us," but "it takes a little time."
-
5 of Warren Buffett's Best InvestmentsWarren Buffett has had plenty of wins throughout his decades of investing. Here, we highlight five of Buffett's best investments.
-
Apple's 100,000% Return Is a Result of Innovation, Brand Loyalty and BuybacksApple spends billions buying back its own shares, but this is just one catalyst behind the incredible growth in its share price.
