Tech stocks dominated the stock market on Friday, with prices for a wide range of stocks soaring during the session. This followed strong quarterly results and guidance from the top companies in the hardware space. Artificial intelligence (AI) was at the heart of that outperformance, making AI stocks a special target for bulls for the first time in months.
That’s why it’s helpful if your company has “AI” in its name. BigBear.ai Holdings‘ (BBAI -0.69%) 3% profit. Hardware and component manufacturers fared well thanks to the aforementioned peers. broadcom (AVGO -0.16%) Almost 8% progress, micron technology (MU 2.38%) 5% increase. taiwan semiconductor manufacturing industry (TSM -0.39%) and super microcomputer (SMCI 2.61%) Both rose more than 4%.
Dell outperformed 1 in 4
The trigger for the explosion was the renowned hardware expert’s fourth-quarter earnings report released after the market closed on Thursday. Dell Technologies (Dell 2.65%). The company significantly beat analysts’ average estimates for net income and slightly above average estimates for revenue.
That wasn’t the only reason Dell’s stock price soared nearly 32% the next day. Investors were excited by the fact that much of it was fueled by strong demand for AI servers, and were intrigued by the niche this smart company had entered. Orders for such products increased by 40% compared to the previous year, but From the third quarter, Dell’s order backlog has soared to $2.9 billion. This really shows that a company is doing the right business at the right time.
And stay there too. Dell predicts that AI demand will boost the company’s fundamentals in 2024, and judging by the response, investors are fully buying into that prediction. Therefore, there will be ripple effects for other hardware manufacturers and AI niche players as well.
In addition, the Fed is expected to begin lowering its key interest rates soon, although some announcements from Fed officials indicate hesitation. Lower interest rates tend to increase investors’ appetite for risk, and as always, high-growth tech stocks are well on the risk side.
A future powered by AI
While no one would necessarily expect to get 30%+ pops from their favorite tech titles right away, it’s clear that there’s plenty of room for growth in this space. Almost every type of company can benefit from the effective integration of AI capabilities, so the hot demand won’t let up in the near future. The tech stock market will be booming this year, and in many cases will result in significant profits for participants.
Eric Volkman has no position in any stocks mentioned. The Motley Fool owns a position in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and Super Micro Computer. The Motley Fool has a disclosure policy.
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