Investors sold off artificial intelligence-related stocks on Tuesday, driven by concerns over inflated valuations detached from fundamentals. However, market sentiment reversed again by Thursday, with investors renewing their bullish stance on the AI sector.
The catalyst for this shift was Micron Technology's release of a stellar quarterly earnings report on Wednesday evening, which exceeded expectations. This news propelled its stock to surge over 16% in Thursday's pre-market trading session.
The company's third-quarter profit skyrocketed to $28.2 billion, a near fourteen-fold increase year-over-year, while quarterly revenue surged 346% compared to the same period last year.
Micron Technology specializes in memory semiconductors, a core hardware component for running large AI models that is currently in a state of global shortage. In its earnings report, the company disclosed that it has secured $22 billion in long-term supply agreements from customers to ensure stable chip supply.
Just this Tuesday, Micron Technology's stock had plunged 13%, as global markets collectively sold off shares of AI and related supply chain companies. Such extreme volatility underscores the massive capital investors have wagered on the AI industry, where even a hint that companies may fail to meet profit expectations can trigger large-scale capital flight.
The recent sell-off lacked a single, clear trigger. Some market analysts attributed it to panic triggered by significant declines in the stocks of Google and SpaceX the previous day. Other views suggested that investor risk aversion increased due to concerns that the Federal Reserve might raise interest rates again.
During Thursday's U.S. pre-market trading, the tech-heavy Nasdaq index rose 2.15%, the S&P 500 gained 0.75%, and the Dow Jones Industrial Average edged up 0.3%.
In Europe, the benchmark Stoxx 600 index rose 0.6% in afternoon trading. In Asian markets, Japan's Nikkei 225 index closed up 4.6%, while South Korea's KOSPI index finished 5.4% higher. The South Korean market had plunged 10% on Tuesday, triggering a circuit breaker that halted trading for 20 minutes to curb panic.
On Tuesday, shares of the world's two leading memory chip makers, SK Hynix and Samsung Electronics, each fell over 12%, directly dragging down the South Korean market, as these two giants account for roughly half of the KOSPI's total market capitalization.
On Thursday, however, SK Hynix announced plans to list on the U.S. Nasdaq, sending its stock soaring 13%. Currently, SK Hynix and Micron Technology are both part of the elite group of AI companies valued in the trillion-dollar range.
Comments