2/8/2024

AI drives tech market growth

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Key points:

  • Companies investing in AI technologies are seeing growth.
  • Arm shares rose 30% after beating forecasts, driven by the development of AI chips.
  • Nvidia may become more expensive than Amazon for the first time in 20 years; Nvidia shares rose 40% in 2024.

Meanwhile, optimism in the technology sector about the future of artificial intelligence is growing. Companies investing in AI technologies continue to increase their growth.

Arm shares rise on strong forecast for AI chip upgrades

On Wednesday, Arm shares experienced a surge of over 30%, driven by the British technology company’s optimistic forecast for quarterly sales and profits, surpassing Wall Street expectations. The heightened demand from customers involved in the development of new chips for artificial intelligence work played a significant role in this positive outlook.

This surge in Arm’s shares translated to a substantial increase in its market capitalization, amounting to approximately $26 billion. Currently, Arm shares are trading at $102.11, marking a twofold increase compared to the $51 price set during its initial public offering in September.

As per LSEG, Arm’s fourth-quarter sales and adjusted earnings estimates average $875 million and 30 cents per share, respectively. These figures outperformed the earlier estimates of $780.3 million in sales and 21 cents per share in earnings.

Nvidia’s market value overtakes Amazon

Due to Wall Street’s growing interest in artificial intelligence, Nvidia has surpassed Amazon in market value for the first time in two decades. A substantial 40% surge in Nvidia shares in 2024 has propelled its market capitalization to $1.715 trillion as of midday trading on Wednesday. This places the company’s value just about 3% below Amazon, which stands at $1.767 trillion, and less than 6% below Alphabet’s value of $1.812 trillion.

Following an optimistic report from Morgan Stanley, Nvidia shares further increased by 1.8% to reach $694.48. Morgan Stanley, in response to the positive outlook, raised its price target per share from $603 to $750. Nvidia is scheduled to report its quarterly results on February 21.

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