Wall Street jumps on inflation update, ASX set to rise
Billions of dollars are pouring into artificial intelligence technology that has helped superstar stocks like Nvidia lead the market for years.
But questions are growing about whether stock prices have gone too high and whether customers will be able to get a good enough return on their AI investments through higher profits and productivity. Concerns are also putting pressure on companies that borrow heavily for AI investments.
Oracle and Broadcom have been at the center of such concerns lately, with their stock prices falling sharply since last week even though both reported better profits than analysts expected in the latest quarter. Oracle rose 2.1 percent on Thursday and Broadcom rose 0.3 percent.
Nvidia, Wall Street’s most influential chip company due to its enormous size, gained 2.7 percent.
Another winner was Trump Media & Technology Group, which made up for some of its huge loss throughout the year with a 34 percent increase and entered the day with 69.3 percent. The company, which started with President Donald Trump’s Truth Social platform and later moved into cryptocurrencies and various other businesses, is now diving into nuclear energy.
It is merging with TAE Technologies in an all-stock deal, and each company will own about half of the combined business. The companies said the deal will pair TMTG’s ability to attract investors and raise significant funds with TAE technology. They hope to commercially operate TAE’s nuclear fusion reactors that will produce energy similar to the sun.
Cintas rose 0.9 per cent after the provider of work uniforms and cleaning supplies reported stronger-than-analysts-expected profits in the latest quarter and also announced a program to buy back its own shares, sending up to US$1 billion ($1.5 billion) to shareholders.
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Darden Restaurants, the company behind Olive Garden and LongHorn Steakhouse, rose 0.9 percent even though its latest quarterly profit fell short of analysts’ expectations. The increase in revenue exceeded expectations, benefiting from both the opening of new restaurants and the increase in revenue at its old locations.
CarMax has fluctuated sharply between gains and losses and was last down 0.7 percent. The auto retailer reported stronger profits than analysts expected in its latest quarter. But it also said it may make less profit on every $1 in revenue from used car sales in the current quarter as it tries to be more competitive in the market. It also plans to increase marketing spend to attract customers to parties.
In foreign stock markets, after the Bank of England cut interest rates and the European Central Bank remained stable, indices rose by 0.3 percent in London, 0.5 percent in France and 0.5 percent in Germany.
Asian indices were mixed; Stocks fell 1.5 percent in South Korea and rose 0.2 percent in Shanghai.
In the bond market, Treasury yields fell following an encouraging report on U.S. inflation.
The yield on the 10-year Treasury note fell to 4.11 percent from 4.16 percent on Wednesday.
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