The technology sector of the U.S. stock market demonstrated robust performance on Monday, fueled by the ongoing enthusiasm for artificial intelligence and a gradual absorption of market risks. Both the S&P 500 and the Nasdaq indices have now recovered all losses incurred since the outbreak of the recent US-Iran conflict. Oracle (ORCL.US) experienced a significant surge due to progress in its AI business, while NVIDIA (NVDA.US) achieved its ninth consecutive day of gains.
Oracle's stock led the market rally following the demonstration of its AI solutions for the utilities sector at the Customer Edge Summit. The company showcased products including "Utilities Opower" and "Aconex," stating these tools have already helped clients achieve substantial energy savings and improve project management efficiency. Boosted by this news, Oracle's share price climbed over 12% to approximately $155.62, making it one of the top performers in the S&P 500 for the day. However, for the year to date, the stock remains down about 21% and has retreated more than 50% from its historical peak, as the market continues to monitor the sustainability of its AI monetization capabilities.
Concurrently, NVIDIA's stock price rose 0.36% to $189.31, marking its ninth straight session of gains. The stock has advanced over 14% in the last eight trading days, significantly outperforming the broader market. Institutions generally maintain a positive outlook on its fundamentals, believing the company's leading position in AI computing will continue to benefit from industry expansion. Market projections anticipate its fiscal 2027 earnings per share will grow by approximately 71%, with gross margins sustained around 75%. The next-generation Vera Rubin chip is also viewed as a key future growth catalyst. Nonetheless, some perspectives highlight that its valuation has already reached elevated levels.
Regarding the overall market, Morgan Stanley suggests the current correction phase may be in its later stages. Data indicates that since last October, the forward price-to-earnings ratio of the S&P 500 has declined about 18% from its peak. A correction of this magnitude is typically seen during economic recessions or periods of significant Federal Reserve tightening, which is not the current baseline scenario. More notably, the internal market adjustment has been even more pronounced. Over half of the stocks in the Russell 3000 index have experienced declines exceeding 20%, indicating the market has already priced in a substantial amount of risk factors and is not in a state of excessive optimism.
In the AI sector, Morgan Stanley points out that market expectations for "disruptive impact" have outpaced actual application. In the short term, AI is more likely to enhance corporate profit margins rather than compress earnings, a trend already reflected in median corporate profits achieving double-digit growth—the fastest pace since 2021. However, the institution also cautions that the final stage of a market correction is often accompanied by volatility. A secondary downturn cannot be ruled out if renewed turbulence emerges in interest rates or the bond market.
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