The rally was attributed to the expectation that lower interest rates would boost consumer spending and business investment, leading to increased demand for tech products. The Federal Reserve’s interest rate cut was a significant event that had a ripple effect across the market. It signaled a shift in monetary policy, indicating a willingness to stimulate economic growth. This move was particularly impactful for the tech sector, which has been facing headwinds from rising inflation and supply chain disruptions.
Lower interest rates tend to benefit tech stocks because reduced borrowing costs and bond yields make risky bets more attractive. In addition to the central bank’s half-point reduction, the Federal Open Market Committee indicated through its “dot plot” the equivalent of 50 more basis points of cuts by the end of the year, eventually coming down by 2 percentage points beyond Wednesday’s move. The Hurricane season is on. Our meteorologists are ready. Sign up for the NBC 6 Weather newsletter to get the latest forecast in your inbox. While the Nasdaq has been on a steady rise this year, powered by Nvidia and the enthusiasm around artificial intelligence, Thursday’s rally pushed the benchmark to its highest since mid-July. The Nasdaq peaked at 18,647.45 on July 10, and it is now just 3.5% shy of that level, closing at 18,013.98.
The company’s stock price has been on a steady climb since the beginning of the year, reflecting its strong performance in the AI market. Nvidia’s success in the AI market is attributed to its powerful GPUs, which are specifically designed for the complex computations required by AI models. These GPUs, known as “data centers,” are the backbone of AI development and deployment.
But lower rates are seen as another potential boon. Fellow chipmakers Advanced Micro Devices and Broadcom also rallied big on Thursday, gaining 5.7% and 3.9%, respectively. AMD is trying to challenge Nvidia in the AI market, but it is far behind and has some skeptics on Wall Street. The stock is only up about 6% this year. AMD CEO Lisa Su told CNBC’s Jim Cramer on Wednesday that AI is a very long game, and we are at the early stages. “Let’s not be impatient. Tech trends are meant to play out over years, not over months,” Su said. “We’ve only been in this, let’s call it, ChatGPT world for maybe like 18 months. We’re all learning. It’s fun. We all use it.”
This statement reflects the growing belief that AI is poised to revolutionize various sectors, transforming how we live, work, and interact with the world. The potential impact of AI on education is significant. AI-powered tools can personalize learning experiences, adapt to individual student needs, and provide real-time feedback. Imagine a classroom where students receive personalized learning paths based on their strengths and weaknesses, with AI tutors providing instant guidance and support.
WATCH: Cramer’s interview with AMD CEO Lisa Su