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?
-
The Most Tax-Friendly State for Retirement in 2025: Here It IsRetirement Tax How do you retire ‘tax-free’? This state doesn’t tax retirement income, has a low median property tax bill, and even offers savings on gas. Are you ready for a move?
-
Plan for Higher Health Care Costs in 2026: Projected Medicare Part B and Part D PremiumsIn 2026, Medicare participants will pay more for their health care. Part B costs are expected to rise more than 10%. Here's what you can do.
-
Dow Dives 542 Points on Soft Jobs Data: Stock Market TodayThe last day of a busy week ends with the first greater-than-1% move in either direction in more than a month.
-
Stocks Can't Hold Meta, Microsoft Gains: Stock Market TodayThe main indexes all opened higher Thursday on impressive Big Tech earnings, but momentum faded into the close.
-
How to Invest for a Fall Interest Rate Cut by the FedA lot can happen between now and then, but the probability the Fed cuts interest rates in September is back above 80%.
-
Stocks Are Up and Down on Fed Day: Stock Market TodayIn another sign of changing times, JPMorgan has partnered with Coinbase to enable cryptocurrency purchases with credit cards.
-
UnitedHealth Stock Drags on Dow: Stock Market TodayCorporate earnings have dominated Wall Street's attention this week, but that changes on Wednesday.
-
Stocks Close Mixed to Start Fed Week: Stock Market TodayNews of an EU-U.S. trade deal was met with muted reaction from market participants who are looking ahead to a jam-packed week.
-
Stocks Rise After Trump-Powell Fed Tour: Stock Market TodayNvidia hit a new all-time high intraday, but another renowned semiconductor name and some less iconic stocks were bigger movers Friday.
-
Are Buffett and Berkshire About to Bail on Kraft Heinz Stock?Warren Buffett and Berkshire Hathaway own a lot of Kraft Heinz stock, so what happens when they decide to sell KHC?
