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AI Comes into Focus While Powerhouse Companies Are to Report

Miguel A. Rodriguez
Miguel A. Rodriguez
22 January 2024

Discover what is causing big banks to upgrade ratings and what the shift may be for stock performances this year. Continue reading the daily market overview and discover upcoming earnings, how stocks and indices are performing, and more.  

Stock Market Surges While Indices Fully Recover from a Slow Start

Friday ended the market session with a sharp rise in the stock market. US indices reached new all-time highs after a weak and indecisive start to the year.

The strong performance of North American stock indices was led by technology companies, with the Nasdaq technology index gaining almost 2% in the session.

 

Big Tech to Report Earnings This Week

The earnings season kicks off this week, featuring reports from major tech giants such as Tesla, Netflix, and Verizon. Additionally, highly anticipated earnings from massive companies like Microsoft, Google, and Apple will also be revealed.

Investors are keenly watching, with high expectations for the upcoming announcements from these companies in the next few days.

Upcoming Earnings Watch: 

 

AI Drives Rating Shifts for Tech Stocks

Investment banks are revising upwards the ratings of these companies in the technology sector and especially those that have some relationship with AI that have skyrocketed.

For example:

  • Citi analysts moved Marvell Technology Inc. to a "Top Pick" rating citing several AI-related tailwinds.
  • Goldman Sachs analysts moved Broadcom Inc.'s rating. to buy". The bank expects strong double-digit revenue growth in the company's AI-related businesses.
  • Other analysts increased their price target for Qualcomm Inc. shares, due to the development of AI in its devices and a robust product roadmap that improves cost discipline.

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Qualcomm daily chart, January 19, 2024. Source: CAPEX.com WebTrader.   

 

A Shift from Rate-Talk to Performance

Over the last two years, expectations about interest rates have been the main force driving the stock market. Currently, investors widely believe that banks will soon lower these rates. The big question is timing: will they begin to cut rates as early as March, or wait until the summer? This timing might slightly affect the markets, but as uncertainty around this issue decreases, market movements will likely be more influenced by broader economic performance and specific technological projects companies are working on, especially those related to artificial intelligence (AI).

 

Key Takeaways

  • The Stock market continued its strong performance on Friday.
  • Indices follow-suit in the surge while the Nasdaq gained nearly 2%.
  • Big tech quarterly earnings are expected this week.
  • AI is driving a shift while banks are upgrading their ratings.
  • Qualcomm is among the few benefiting from the upgrades as the company continues to evolve its AI and integrate it in the products and operations.
  • As the year picks up it is clear that the market is more likely to react to the performance of companies as opposed to interest rates being the driving force this year.

 

Sources: Bloomberg, Reuters 

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