AI stock rally: OpenAI valuation lifts Nvidia, AMD, Intel & more

00:00 Speaker A

And Brooke, I want to start with you on just the gains that we’re seeing in the AI trade. What’s the biggest sectors, the biggest names that are really bouncing off of this open AI news?

00:10 Brooke

Yeah, now that we heard more about open AI’s valuation, we are seeing this renewed optimism when it comes to the AI tech trade that we saw really over the summer. Following AI announcing this this valuation, or rather, you know, we’re getting this report. We are seeing on the flip side, Samsung electronics as well as SK Heynex, also seeing those stocks move higher this morning, as you could see right now.

00:32 Brooke

They both signed letters of intent to really supply memory chips for open AI’s data centers. So once again, this renewed optimism around what exactly open AI could bring to the table. Of course, it is still a private company, but we see both of these, these letter of intense really causing both socks to rally this morning.

00:46 Brooke

In addition to that, we have other news around AI, really driving some momentum behind trades we haven’t seen in a while. Speaking of AMD’s a top trending ticker on Yahoo Finance’s platform this morning, and that’s basically because Intel is in talks to add AMD as a customer. So we are seeing some momentum there this morning, up about 3% in extended hours trading.

01:06 Brooke

Um, you know, and also too, I do want to point out that Qualcomm, they shifted their chips to Arm holding after a litigation with Arm. We now are seeing some momentum there. In addition to that, Nvidia, there was some skepticism about that 100 billion dollar deal in open AI and the and the circular nature of it. But now based upon this fact that we are getting this higher valuation than expected around open AI. We are seeing Nvidia move higher yet again this morning. And so all of these are really driving momentum behind that AI trade that we haven’t seen in some quite some time.

01:39 Speaker A

And clearly investors are optimistic here. We have stocks at record highs. You were just running through some of those tech names. But we do have some Wall Street watchers that are warning of frothiness, of overexuberance. What is the street saying? Are these valuations justified?

01:55 Brooke

Yeah, what we’re hearing right now is there’s a few different factors going into what could lead the momentum to those record S&P 500 targets by year end. You know, we did see the S&P 500 cross that 6700 mark just yesterday at market close. But now what we’re hearing, particularly from a UBS strategist, sort of saying, look beyond AI technologies, look into autonomous systems, look into humanoids, think beyond the AI picture.

02:20 Brooke

as really what this is all going to come down to is what exactly we see these Q3 earnings report, you know, come out essentially to be. If they do yet again beat Wall Street’s expectations. On top of that, you have to take into consideration that there’s now nearly 100% chance that the Fed will cut interest rates especially amid this backdrop where we do have the shutdown and limited data going into the October 29th meeting.

02:44 Brooke

And all of this in addition, when we are seeing potentially higher yields getting attention there, that could drive investors out of the equity market and into yields. And so there’s multiple different factors at play, but we have heard from multiple firms over the past month that they did raise their S&P 500 target for year end.