Investors Are Buying AI and Musk Every Way They Can: Morning Brief

That’s the takeaway from this morning’s brief that you can take away sign up to receive in your e-mail every morning along with:

The expansion of the stock market rally has yet to materialize as investors continue to focus on (almost) everything that AI will touch.

Earlier this week, Elon Musk revealed that Super Micro (SMCI) will provide hardware for the supercomputer that his artificial intelligence startup is building. This caused an increase in share prices.

When the CEO of Dell (DELL) said his company would be building an “AI factory” for Musk’s xAI in partnership with AI king Nvidia (NVDA), the company’s shares also rose.

And while both names’ jumps were short-lived, their performances this year and the reaction to Musk’s one-word post are a reminder that what he says matters to many people and that anything related to artificial intelligence will move the markets.

So far this year, SMCI is up over 200%. Dell, which to some refers to the world of PC 1.0, saw its stock almost double.

It doesn’t take a contrived plan or a lateral approach to benefit from Wall Street’s interest in artificial intelligence technology. The main factor driving 2024’s seemingly unbroken winning streak is the earning potential of the Magnificent Seven, which includes Nvidia, Tesla and platform giants.

Citi analysts, who earlier this week raised their year-end S&P 500 target to 5,600, noted that more than two-thirds of the stock’s gains so far have come from the Magnificent Seven.

And adding Elon to the mix certainly doesn’t hurt.

The Super Micro news has a clear Musk dimension, and part of the multi-CEO dynamic is that his businesses operate in different industries and are themselves interconnected. However, because Tesla is Musk’s only public company, most investors can only become involved in his other ventures indirectly. If you can’t buy xAI, why not buy some of its vendors?

A similar dynamic occurs in the world of artificial intelligence.

The AI ​​rally also extends beyond hardware manufacturers. Investors trying to create Musk’s makeshift basket of related tech holdings are doing the same with Nvidia. Because it’s not just Big Tech platforms producing apps and productivity software that are powered by AI. There’s a whole ecosystem.

Powering the computer systems that train and operate artificial intelligence systems requires enormous amounts of energy. Utilities are riding the AI ​​wave.

Amazon (AMZN), Alphabet (GOOGL), Microsoft (MSFT) and Meta (META) are expected to spend a combined $200 billion this year on cloud and artificial intelligence investments that will include building and operating data centers. Meanwhile, according to estimates by consulting firm McKinsey, energy demand in US data centers is expected to more than double by 2030, partly due to artificial intelligence.

The story continues

Early arrival is nice. But the AI ​​madness proves that just getting inside is more than enough.

Hamza Shaban is a Yahoo Finance reporter covering markets and the economy. Follow Hamza on Twitter @hshaban.

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