Nvidia's 24% jump Thursday lit an AI fire that carried these 19 stocks to gains of as much as 17%
By Philip van Doorn
Nvidia's forecast of a 50% increase in sales caused euphoria as investors looked to jump aboard the artificial-intelligence bandwagon
Nvidia Corp. did something remarkable to set up a rally for its stock on Thursday, while lifting shares of other companies involved in new technology employing artificial intelligence.
Nvidia's (NVDA) big splash was to predict a 50% sequential increase in quarterly sales, with CEO Jensen Huang tying that expectation to a "killer app," a term he now applies to the company's graphics processing units (GPUs) used in data centers that support companies' efforts to roll out their new AI-enabled products and services.
In an interview with Therese Poletti, Nvidia CFO Colette Kress explained how "the inflection on AI and accelerated computing" helped drive the company's revenue forecast.
The company's stock rose 24% on Thursday, when the S&P 500 was lifted nearly 1%. A list of Thursday's 20 strongest performers in the benchmark index is below -- it is dominated by tech stocks showing gains of 5% or more for the session.
The action propelled several AI-themed exchange-traded funds.
Nvidia appears to be "pricey" even to analysts who love the stock, with a forward price-to-earnings ratio of more than 50. But the type of growth the company expects is always expensive, and a stock such as Amazon.com Inc. (AMZN), which has been such a strong performer for so long, has traded at an average forward P/E ratio of 67.5 over the past 10 years.
Click here for a closer look at Nvidia's price ratios, the heavy weighting for its stock and other major AI players such as Microsoft (MSFT) and Alphabet (GOOGL)(GOOGL) in the S&P 500 and the Russell 1000 Growth Index and other ways to play the AI trend.
The Ratings Game:
In an interview, Ken Laudan of Buffalo Funds cautioned that any discussion of AI as an investment theme needed to encompass "regulations and boundaries," because the new technology "has a potential to get out of hand."
In a blog post Thursday, Microsoft Corp. President Brad Smith wrote that the federal government should create a new agency to oversee the deployment of the new technology to "ensure that AI remains under human control."
Here are the 20 best performers among the S&P 500 on Thursday -- most are in the technology sector, and the two real-estate investment trusts on the list own data centers:
Company Industry Ticker May 25 price change 2023 price change 2022 price change Forward P/E Nvidia Corp. Semiconductors NVDA 24% 160% -50% 50.1 Monolithic Power Systems Inc. Semiconductors MPWR 17% 38% -28% 38.4 Advanced Micro Devices Inc. Semiconductors AMD 11% 86% -55% 35.8 Arista Networks Inc. Computer Peripherals ANET 11% 29% -16% 25.3 Cadence Design Systems Inc. Software CDNS 10% 40% -14% 41.9 Synopsys Inc. Software SNPS 10% 36% -13% 37.5 Broadcom Inc. Semiconductors AVGO 7% 30% -16% 16.6 Adobe Inc. Software ADBE 7% 17% -41% 23.8 Applied Materials Inc. Industrial Machinery AMAT 7% 34% -38% 18.1 Dish Network Corp. Class A Cable/ Satellite TV DISH 7% -52% -57% 8.5 Digital Realty Trust Inc. Real-Estate Investment Trusts DLR 7% -8% -43% 84.6 Lam Research Corp. Industrial Machinery LRCX 6% 43% -42% 22.8 KLA Corp. Semiconductors KLAC 6% 15% -12% 21.2 Oracle Corp. Software ORCL 6% 28% -6% 18.4 ServiceNow Inc. Software NOW 6% 37% -40% 51.0 Ralph Lauren Corp. Class A Apparel/ Footwear RL 5% 8% -11% 12.0 Eaton Corp. PLC Electrical Products ETN 5% 13% -9% 20.0 MetLife Inc. Multi-Line Insurance MET 5% -27% 16% 6.2 Equinix Inc. Real-Estate Investment Trusts EQIX 5% 8% -23% 74.4 Micron Technology Inc. Semiconductors MU 5% 39% -46% N/A Source: FactSet
Click on the tickers for more about each company.
Click here for Tomi Kilgore's detailed guide to the wealth of information available for free on the MarketWatch quote page.
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-Philip van Doorn
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May 26, 2023 06:33 ET (10:33 GMT)
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