The AI craze has made a triumphant return to Wall Street, with investors eagerly buying back into the narrative of big tech’s expensive bets on artificial intelligence tools. Standout quarterly results from tech giants Microsoft and Alphabet, as well as a successful IPO debut for Rubrik, have reignited confidence in the growth potential of AI.
Alphabet’s shares reached an all-time high, surpassing a $2 trillion market cap for the first time, while Microsoft’s shares ended up 1.8%, with a market cap just over $3 trillion. According to BMO Wealth Management U.S. chief investment officer Yung-Yu Ma, “The AI investment story is intact.”
The stellar performance of Microsoft, Alphabet, and Tesla, which has ventured into AI through its electric vehicles, propelled the S&P 500 and Nasdaq to their best weekly performance this year. HSBC’s Nicole Inui noted, “This is a secular growth story, and we think the sector continues to stay strong over the second half of the year.”
Results from Microsoft and Google have provided a glimpse into how AI will drive stocks for years to come. Microsoft reported that AI services contributed significantly to the revenue jump in its Azure cloud division, while Google’s cloud revenue surged 28% thanks to AI contributions.
The rally in tech stocks comes ahead of key earnings reports from Amazon and Apple, which will further test the AI tech trade amid high valuations. The AI opportunity extends beyond Microsoft and Google, with analysts bullish on Meta’s potential as an AI-driven company.
As the AI craze continues to captivate investors, the tech sector remains a focal point for growth and innovation in the market.
