The Nasdaq 100 climbed as much as 2.6% on Wednesday, briefly wiping out its entire decline since the U.S. midterm elections, as renewed enthusiasm for artificial intelligence trades drove a broad rebound in American technology stocks and eased concerns about the long-term sustainability of AI infrastructure spending.
As of 1:50 p.m. New York time, the Nasdaq 100 was up 2.6%, touching its highest intraday level since November 4.
Better-than-expected results from CoreWeave, strong demand for Anthropic's IPO, and OpenAI's impressive quarterly performance together reignited investor appetite for AI trades. The S&P 500 rose 1.7%, while the Dow Jones Industrial Average gained 0.5%.
Previously, mounting worries that a Democratic sweep of Congress would stifle AI infrastructure investment had hammered the Nasdaq 100, with names like Nvidia and Micron Technology bearing the brunt. Wednesday's rally means investors positioned in AI infrastructure could recover those losses in the near term.
CoreWeave Results Boost Confidence in AI Infrastructure
CoreWeave shares surged as much as 27% intraday, marking their best single-day performance in more than a year.
The cloud infrastructure company reported better-than-expected revenue after Tuesday's close, along with a full-year outlook that surpassed Wall Street estimates, directly lifting the data center, storage and memory, chip equipment, and server-related sectors across the board.
Shaon Baqui, senior equity analyst at Janus Henderson, said:
CoreWeave has removed many of the market's concerns regarding demand, pricing, and financing. You can slow the pace of AI capital expenditure, but you cannot truly slow the pace of AI adoption.
This earnings report is a positive signal for emerging cloud computing companies and for the AI trade as a whole. Brian Mulberry, chief market strategist at Zack Investment Management, noted in a report:
If CoreWeave can deliver this kind of execution for several consecutive quarters, market worries will gradually fade.
Strategists: AI Bull Market Not Over, Correction Nearing Its End
Despite recent notable volatility in AI trades, strategists widely believe this does not signal the end of the bull market.
Mike Wilson, chief U.S. equity strategist and chief investment officer at Morgan Stanley, said:
In our view, this correction is 95% complete, and we are quite confident that AI infrastructure buildout will continue.
Meanwhile, according to people familiar with the matter, demand for Anthropic's IPO has reached several times the available shares, and robust primary market demand has further supported secondary market sentiment.
However, Seema Shah, chief global strategist at Principal Asset Management, cautioned investors to remain prudent:
Investors can no longer pile in blindly.
She said on Bloomberg Television that she expects divergence among individual stocks to widen over the coming quarters and advised investors to place greater emphasis on company fundamentals:
The key is to be more selective with investments, while also recognizing that there are still opportunities worth watching outside the technology sector.
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