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AI at the Forefront of Ramping Up Share Prices of Tech Companies

Miguel A. Rodriguez
Miguel A. Rodriguez
26 May 2023

Nvidia Corporation’s shares reached a record high yesterday after the company surprised the market with higher-than-expected quarterly revenue. Microsoft Corporation and Alphabet Inc. also followed the same pattern.  

Yesterday, the stock indices partially regained the ground they had previously lost after the markets temporarily put aside their concern about a possible US government default. 

The tech-heavy Nasdaq gained more than 1%, partly due to rising shares of Nvidia Corporation after the company disclosed earnings that were far beyond expectations, which also helped other AI-related companies. 

The Nvidia Corporation, the most valuable listed chip firm in the world, posted a quarterly revenue that was 50% higher than forecasts and announced it was ramping up production to satisfy demand for its artificial intelligence. The company's shares rose by 25% as a result, reaching an all-time high. 

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Microsoft Corporation and Alphabet Inc., two other AI-related businesses, saw their shares rise by about 3.7% and 2.0%, respectively. 

The US GDP figure for the first quarter was released yesterday, showing 1.3% growth, slightly higher than expected. This figure demonstrates the US economy's resilience in the face of all the challenges it has faced, including rising interest rates, inflation, and most recently the regional bank crisis. Additionally, fewer unemployment claims were filed than anticipated, demonstrating the continued strength of the labor market. The major inflation number and the Federal Reserve's favored measure, Personal Consumption Expenditure, will be made public today. 

These economic figures caused the bond yields, which have been increasing steadily for days, to increase somewhat, with the 10-year bond moving up to around 3.80%. 

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However, in real terms, the sale of treasury bonds due to concerns about a US government default is what is mostly to blame for these spikes in market interest rates. 

As a result, the debt ceiling talks keep attracting a great deal of market attention. On Thursday, US President Joe Biden and top Republican congressman Kevin McCarthy were just $70 billion apart in a deal that would encompass billions of dollars, according to several of the participants in the negotiations.   

In exchange for caps on government spending, the agreement proposes to raise the debt ceiling to $31.4 trillion. 

DMO 26.05.2023 graph.png

Sources: Bloomberg, Reuters 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.