Nvidia CEO Jensen Huang presents the Nvidia Blackwell platform at an event ahead of the COMPUTEX Forum, in Taipei, Taiwan, on June 2, 2024.
Ann Wang | Reuters
Investors poured into tech stocks at one of the fastest clips of the year a day after the Federal Reserve cut its benchmark interest rate for the first time since 2020.
Led by a 7.4% gain in shares of Tesla and a 4% jump in Nvidia, the Nasdaq rose 2.5% on Thursday, its fourth-sharpest rally of 2024. The biggest gain of the year for the tech-heavy index was a 3% increase on Feb. 22.
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.
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’s now just 3.5% shy of that level, closing at 18,013.98.
Nvidia, whose processors are powering the generative AI boom and services like OpenAI’s ChatGPT, gained 4% on Thursday to $117.87. The shares are up about 138% for the year after more than tripling in 2023, though they’re still 13% below their all-time high reached in June.
Nvidia counts on a relatively small group of customers — namely Microsoft, Meta, Alphabet, Amazon, Oracle and OpenAI — for an outsized amount of revenue because those are the companies either developing large language models, hosting big AI workloads or doing both. Any sign of slackening demand creates concern around Nvidia’s stock.
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’s 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’re 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.”
Su said AI is going to make its way into “all aspects of our lives,” including education and drug development.
“The beauty of all this is you need the computing, and that’s what we do,” Su said.
Tesla was the biggest gainer among tech’s megacap companies on Thursday, gaining 7.4%. The electric car maker has been a relative laggard for the year, down almost 2%, compared to the Nasdaq’s 20% gain. However, Tesla is up 72% from its low for the year in April.
Among the other top tech companies, Apple and Meta also closed with big gains, each rising almost 4%.
Altimeter Capital CEO Brad Gerstner said Thursday that he’s moving out of the “bomb shelter” with Nvidia and into a position of safety, expecting that the chipmaker is positioned to withstand President Donald Trump’s widespread tariffs.
“The growth and the demand for GPUs is off the charts,” he told CNBC’s “Fast Money Halftime Report,” referring to Nvidia’s graphics processing units that are powering the artificial intelligence boom. He said investors just need to listen to commentary from OpenAI, Google and Elon Musk.
President Trump announced an expansive and aggressive “reciprocal tariff” policy in a ceremony at the White House on Wednesday. The plan established a 10% baseline tariff, though many countries like China, Vietnam and Taiwan are subject to steeper rates. The announcement sent stocks tumbling on Thursday, with the tech-heavy Nasdaq down more than 5%, headed for its worst day since 2022.
The big reason Nvidia may be better positioned to withstand Trump’s tariff hikes is because semiconductors are on the list of exceptions, which Gerstner called a “wise exception” due to the importance of AI.
Nvidia’s business has exploded since the release of OpenAI’s ChatGPT in 2022, and annual revenue has more than doubled in each of the past two fiscal years. After a massive rally, Nvidia’s stock price has dropped by more than 20% this year and was down almost 7% on Thursday.
Gerstner is concerned about the potential of a recession due to the tariffs, but is relatively bullish on Nvidia, and said the “negative impact from tariffs will be much less than in other areas.”
He said it’s key for the U.S. to stay competitive in AI. And while the company’s chips are designed domestically, they’re manufactured in Taiwan “because they can’t be fabricated in the U.S.” Higher tariffs would punish companies like Meta and Microsoft, he said.
“We’re in a global race in AI,” Gerstner said. “We can’t hamper our ability to win that race.”
YouTube on Thursday announced new video creation tools for Shorts, its short-form video feed that competes against TikTok.
The features come at a time when TikTok, which is owned by Chinese company ByteDance, is at risk of an effective ban in the U.S. if it’s not sold to an American owner by April 5.
Among the new tools is an updated video editor that allows creators to make precise adjustments and edits, a feature that automatically syncs video cuts to the beat of a song and AI stickers.
The creator tools will become available later this spring, said YouTube, which is owned by Google.
Along with the new features, YouTube last week said it was changing the way view counts are tabulated on Shorts. Under the new guidelines, Shorts views will count the number of times the video is played or replayed with no minimum watch time requirement.
Previously, views were only counted if a video was played for a certain number of seconds. This new tabulation method is similar to how views are counted on TikTok and Meta’s Reels, and will likely inflate view counts.
“We got this feedback from creators that this is what they wanted. It’s a way for them to better understand when their Shorts have been seen,” YouTube Chief Product Officer Johanna Voolich said in a YouTube video. “It’s useful for creators who post across multiple platforms.”
CEO of Meta and Facebook Mark Zuckerberg, Lauren Sanchez, Amazon founder Jeff Bezos, Google CEO Sundar Pichai, and Tesla and SpaceX CEO Elon Musk attend the inauguration ceremony before Donald Trump is sworn in as the 47th U.S. president in the U.S. Capitol Rotunda in Washington, Jan. 20, 2025.
Saul Loeb | Via Reuters
Technology stocks plummeted Thursday after President Donald Trump’s new tariff policies sparked widespread market panic.
Apple led the declines among the so-called “Magnificent Seven” group, dropping nearly 9%. The iPhone maker makes its devices in China and other Asian countries. The stock is on pace for its steepest drop since 2020.
Other megacaps also felt the pressure. Meta Platforms and Amazon fell more than 7% each, while Nvidia and Tesla slumped more than 5%. Nvidia builds its new chips in Taiwan and relies on Mexico for assembling its artificial intelligence systems. Microsoft and Alphabet both fell about 2%.
The drop in technology stocks came amid a broader market selloff spurred by fears of a global trade war after Trump unveiled a blanket 10% tariff on all imported goods and a range of higher duties targeting specific countries after the bell Wednesday. He said the new tariffs would be a “declaration of economic independence” for the U.S.
Companies and countries worldwide have already begun responding to the wide-sweeping policy, which included a 34% tariff on China stacked on a previous 20% tax, a 46% duty on Vietnam and a 20% levy on imports from the European Union.
China’s Ministry of Commerce urged the U.S. to “immediately cancel” the unilateral tariff measures and said it would take “resolute counter-measures.”
The tariffs come on the heels of a rough quarter for the tech-heavy Nasdaq and the worst period for the index since 2022. Stocks across the board have come under pressure over concerns of a weakening U.S. economy. The Nasdaq Composite dropped nearly 5% on Thursday, bringing its year-to-date loss to 13%.
Trump applauded some megacap technology companies for investing money into the U.S. during his speech, calling attention to Apple’s plan to spend $500 billion over the next four years.