AI sector recovery boosts US stock market

The Nasdaq composite saw a more significant rise, climbing 1.4 per cent, while stocks outside the AI sphere performed less strongly. The Dow Jones Industrial Average, however, edged down 56 points, representing a 0.1 per cent decrease, as of 9:35 a.m. Eastern time.

CoreWeave, a company providing cloud-based access to AI chips, led the upward trend with a 10.7 per cent increase after reporting a smaller-than-expected quarterly loss. The company also addressed concerns surrounding interest rate hikes and potential industry slowdowns.

CoreWeave CEO Michael Intrator highlighted the company’s substantial US$9 billion in customer prepayments and deposits expected within the next three months, suggesting a path towards self-funding. This announcement helped alleviate some anxieties within the industry, which have been amplified by recent U.S. midterm election results, where Democratic victories raised concerns about potential restrictions on AI data center construction.

CoreWeave’s revised revenue forecast, exceeding analyst expectations, further bolstered confidence. While challenges persist for CoreWeave and the broader AI industry, the company’s performance helped other AI-related stocks recover some of their recent losses. Micron Technology gained 5.6 per cent, Broadcom rose 5.6 per cent, GE Vernova increased by 3 per cent, and even Nvidia saw a 2.9 per cent rise, despite ongoing investigations into CEO Jensen Huang’s relationship with a businesswoman accused of sharing sensitive information with China.

Beyond the tech sector, Fossil Group experienced a significant surge of 30.9 per cent after reporting stronger-than-expected profits and raising its annual revenue forecast. Elsewhere on Wall Street, trading was mixed, with more stocks declining than advancing within the S&P 500. StubHub fell 7 per cent following disappointing summer results. Rising oil prices, which added 1.2 per cent to $92.63 a barrel, also exerted pressure on the market. Stock markets in Europe and Asia generally saw gains, with South Korea’s Kospi leading the way. China’s Shanghai Composite rose 0.5 per cent as the country’s Singles Day shopping festival commenced.