The AI ​​business is back as confidence in Big Tech rises

The AI ​​craze has returned to Wall Street – and investors are buying back.

Standout quarterly results from Microsoft (MSFT) and Alphabet (GOOG, GOOGL) plus a well-received IPO debut for Rubrik (RBRK) have put the AI ​​story back on track, creating renewed confidence that the high-priced bets of large technology companies on exciting tools to drive growth.

Alphabet shares rose to a record high on Friday, closing above a $2 trillion market cap for the first time. Microsoft shares ultimately rose 1.8%, covering a market of more than $3 trillion.

“The AI ​​investment story is intact,” Yung-Yu Ma, U.S. Chief Investment Officer of BMO Wealth Management, told Yahoo Finance.

The outperformance of Microsoft and Alphabet, along with Elon Musk's automaker Turn AI play Tesla (TSLA), pushed the S&P 500 (^GSPC) and Nasdaq (^IXIC) to their best weekly performance this year.

“They are profitable,” HSBC's Nicole Inui told Yahoo Finance. “This is a long-term growth story and we believe the sector will remain strong in the second half of the year.”

The results from Microsoft and Google gave Wall Street an early look at how AI will drive stocks in the coming years. Microsoft said AI services were responsible for 7 percentage points of the 31% revenue increase in its Azure cloud division.

Meanwhile, AI's increasing contributions helped Google's cloud revenues rise 28%, compared to a year ago.

“The commentary from both Google and Microsoft tells us there is real demand for AI,” RBC Capital Markets analyst Rishi Jaluria told Yahoo Finance. “It's not just hype, it's not just people talking about it. Capital is actually being put to work.”

In a letter to clients this week, Bank of America's Michael Hartnett wrote that “narrow mega-cap growth leadership” will remain intact until the threat of a recession materializes.

And the possibilities of AI go far beyond Microsoft and Google – the two companies often seen by Wall Street as leaders in the AI ​​race.

Internet analyst Brad Erickson of RBC Capital Markets told Yahoo Finance that Meta's (META) sell-off after earnings was an “overreaction” and believes AI will be a “transformational driver” for the company.

“We would buy it,” Erickson said.

The rally in several Mag 7 stocks comes ahead of next week's key results from Amazon ( AMZN ) and Apple ( AAPL ) — two earnings reports that will provide another critical test for AI technology trading amid sky-high valuations.

Curious about the best Mag 7 name to trade in May amid the acronym's comeback? In the latest episode of the Starting bid podcast, we discuss exactly that. Tune in below.

Seana Smith is an anchor at Yahoo Finance. Follow Smit on Twitter @SeanaNSsmith. Tips about deals, mergers, activist situations or something else? Email seanasmith@yahooinc.com.

Click here for the latest technology news that will impact the stock market.

Read the latest financial and business news from Yahoo Finance

Related Posts

  • Finance
  • July 18, 2024
  • 3 views
  • 4 minutes Read
Here's how the election could affect the municipal bond market

The first presidential debate between U.S. President Joe Biden and former U.S. President and Republican presidential candidate Donald Trump is projected on a screen during a viewing party hosted by…

  • Finance
  • July 18, 2024
  • 2 views
  • 5 minutes Read
'Loophole' could earn you a $7,500 tax credit when leasing an electric car

Maskot | Maskot | Getty Images Buying a new electric vehicle isn’t the only way consumers can access a $7,500 federal EV tax credit. They may also be able to…

Leave a Reply

Your email address will not be published. Required fields are marked *

You Missed

Trump Bitcoin Conference Fundraising Tickets for Nashville Soiree Hit $844,600 Max

  • July 19, 2024
Trump Bitcoin Conference Fundraising Tickets for Nashville Soiree Hit $844,600 Max

Solar parks with rainwater management reduce runoff and erosion, research shows

  • July 19, 2024
Solar parks with rainwater management reduce runoff and erosion, research shows

Food aroma research could help explain why meals in space taste bad

  • July 19, 2024
Food aroma research could help explain why meals in space taste bad

The mindset, technology and tools holding back e-commerce

  • July 19, 2024
The mindset, technology and tools holding back e-commerce

Writer Shalom Auslander catalogs his lifelong battle with self-contempt in ‘Feh’ : NPR

  • July 19, 2024
Writer Shalom Auslander catalogs his lifelong battle with self-contempt in ‘Feh’ : NPR

Canadian Jacob Shaffleburg, Colombian Richard Rios and Copa America stars set for transfers

  • July 19, 2024

Trump speaks at RNC amid Biden election questions

  • July 19, 2024
Trump speaks at RNC amid Biden election questions

Stocks Making the Biggest After-hours Moves: ISRG, NFLX, PLUG

  • July 19, 2024
Stocks Making the Biggest After-hours Moves: ISRG, NFLX, PLUG

The Key to a Purposeful Life in a Distracted World

  • July 19, 2024
The Key to a Purposeful Life in a Distracted World

Groundcherry gets genetic upgrades: Garden wonder turns into agricultural powerhouse

  • July 19, 2024
Groundcherry gets genetic upgrades: Garden wonder turns into agricultural powerhouse

Is Kim Kardashian's Salmon Sperm Treatment Safe or Effective?

  • July 18, 2024
Is Kim Kardashian's Salmon Sperm Treatment Safe or Effective?