:max_bytes(150000):strip_icc()/GettyImages-2251627675-ba3cef878fca43f39990bf3bdb14c137.jpg "Tech Stocks Are Surging Friday. Is the AI Trade Making a Comeback?")
:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-2251627675-ba3cef878fca43f39990bf3bdb14c137.jpg)
Key Takeaways
- AI stocks surged Friday, in what could point to renewed confidence in the sector after a string of positive news.
- UBS analysts said that while the AI trade has pulled back in recent weeks, they remain bullish on the sector’s growth.
Are investors ready to pile back into the AI trade?
Tech stocks led the major indexes higher Friday, with many AI investor favorites among the top performers, in what could be a sign of renewed confidence in the sector.
Shares of cloud computing giant Oracle (ORCL), which slumped recently amid worries about its dependence on a few big AI customers, saw its shares pop over 8% Friday afternoon following reports that it’s set to become a major investor in a new TikTok joint venture.
Memory chip supplier Micron Technology (MU) surged over 6%, extending yesterday’s gains after its quarterly results topped analysts’ expectations on AI-driven demand. Advanced Micro Devices (AMD) was up close to 6%, and Nvidia (NVDA) climbed 3% amid reports the Trump administration has kicked off its review of the chipmaker’s H200 chip exports to China. Other semiconductor stocks also rose, lifting the PHLX Semiconductor Sector Index (SOX) up close to 3%.
Server maker Super Micro Computer (SMCI), data analytics software firm Palantir (PLTR), and networking provider Arista Networks (ANET) climbed too.
Why This Matters to Investors
The AI boom has driven much of the market’s gains in the last few years, but the trade has stumbled in recent weeks amid worries about circular deals that drew parallels to the dotcom bubble. Friday’s big gains in the wake of some positive news this week could point to improving sentiment around the sector, however.
Shares of Google parent Alphabet (GOOGL) and Palo Alto Networks (PANW) edged up about 1% after announcing a multibillion-dollar deal expanding an existing partnership. As part of the deal, Google said its cloud customers will get access to new Palo Alto Networks cybersecurity features, while Palo Alto Networks will use Google models to power its copilots and have access to Google Cloud’s Vertex AI platform.
UBS analysts said that while the AI trade has suffered in recent weeks, they remain bullish on the sector’s growth. “Notwithstanding the uncertainty, we remain constructive on the theme amid a resilient earnings growth outlook,” the analysts wrote in a Friday note.
