Wall Street mixed as Nvidia sparks rush for AI stocks

·3-min read

Wall Street has ended sharply higher after a blowout forecast from Nvidia sent the chipmaker's stock soaring and fuelled a rally in AI-related companies while investors watched for signs of progress in US debt ceiling talks.

Nvidia Corp soared 24 per cent to a record high close after the world's most valuable chipmaker forecast quarterly revenue 50 per cent higher than estimates and said it was ramping up supply to meet demand for its artificial-intelligence (AI) chips.

Investors exchanged almost $US60 billion ($A92 billion) worth of Nvidia's shares, accounting for a fifth of all trading in S&P 500 stocks during the session, according to Refintiv data.

"Nvidia has officially replaced FANG as the centrepiece of this market," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

"Investors are obsessed with AI, and Nvidia is the perfect AI story."

Heavyweight AI players Microsoft Corp and Alphabet Inc rose 3.9 per cent and 2.1 per cent respectively.

Advanced Micro Devices Inc jumped about 11 per cent, Micron Technology Inc added 4.6 per cent and Broadcom Inc climbed more than 7.0 per cent.

The Philadelphia SE Semiconductor index soared 6.8 per cent to its highest level in more than a year in its biggest daily percentage rise since November.

Intel Corp, which investors view as lagging in the AI race, dropped 5.5 per cent, weighing on the Dow Jones Industrial Average.

Wall Street has been jittery in recent days about dragging negotiations in Washington DC to raise the country's $US31.4 trillion debt ceiling and avoid a default.

US President Joe Biden and Republican lawmaker Kevin McCarthy on Thursday were edging close to a deal, with the parties just $US70 billion apart on discretionary spending, Reuters reported, citing a source familiar with the talks.

Reflecting market uncertainty, two-year yields hit their highest since March after ratings agencies Fitch and DBRS Morningstar put the United States on a credit watch for a possible downgrade.

Meanwhile, data showed the number of people in the US filing new claims for unemployment benefits rose only moderately last week while a Commerce Department report confirmed economic growth slowed in the first quarter.

The S&P 500 climbed 0.88 per cent to end the session at 4,151.28 points, the Nasdaq surged 1.71 per cent to 12,698.09 points and the Dow Jones Industrial Average declined 0.11 per cent to 32,764.65 points.

Volume on US exchanges was relatively heavy, with 10.8 billion shares traded, compared to an average of 10.5 billion shares over the previous 20 sessions.

The S&P 500 is up about 8.0 per cent so far in 2023 and the Nasdaq has recovered more than 30 per cent from its losses last year.

Ralph Lauren Corp rallied 5.3 per cent after the luxury retailer beat profit estimates.

Electronics retailer Best Buy Co Inc rose 3.1 per cent following upbeat quarterly earnings, while discount store chain Dollar Tree Inc tumbled after cutting its annual profit outlook.

Declining stocks outnumbered rising ones within the S&P 500 by a 1.4-to-one ratio.

The S&P 500 posted 11 new highs and 31 new lows; the Nasdaq recorded 56 new highs and 163 new lows.