In the latest Daily Market Notes report for investors, Navellier & Associates analysts say strong earnings reports from Microsoft (NASDAQ:) and Alphabet (NASDAQ:) have led to strong gains in the AI sector. He said the outlook and current earnings season have been reinvigorated.
“Stocks are having their best week of the year, recovering from their first major pullback since the strong rally that began in late October. Once again, big tech companies are leading the way, with the Magnificent 7 3.3% for the day and 4.4% for the week,” the analyst highlighted.
Despite earlier cautious comments from Taiwan Semiconductor (TSM) impacting NVIDIA (NVDA) stock, NVDA remains at 873 on the back of major tech companies' reassurances about heavy investments in AI infrastructure. The dollar rebounded.
The return to optimism was fueled by strong printing at Alphabet, which not only beat profit estimates but also announced a significant share buyback and a new dividend, sending the company's stock up 10% today. It hit an all-time high.
“The strong earnings performance of the big tech companies was very important because they are not only heavily weighted in the index, but also represent an even larger share of total revenues,” the analysts said. Ta.
But not all technology companies are doing well, they continued.
Intel (NASDAQ:) reported disappointing sales and lower-than-expected profit margins, and lacked significant exposure to AI. The company's stock price fell 11.2%.
Across the market, both headline and core PCE for March were in line with expectations, easing concerns about high personal consumption expenditure (PCE) inflation and providing a sense of relief to bond markets.
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Meanwhile, yields on 10-year U.S. Treasuries and U.S. bonds declined slightly, reflecting market adjustments to a long-term trend toward lower inflation.
On the consumer side, the latest University of Michigan survey showed that while inflation expectations have stabilized, consumer sentiment has weakened slightly and remains near a three-year high.
Exxon (CVX) and chevron (NYSE:) (NYSE:) experienced a decline after missing earnings estimates, in contrast to energy stocks' minimal impact on broader indexes.
“Overall, this week's strong economic recovery supports buy-in sentiment, and key AI themes remain on track, although uncertainty remains over the timing of the Fed's rate cuts,” the analysts wrote. ” he said.
“Employment remains strong and consumer spending is still growing, with consumer spending rising +0.8% in April, above expectations of 0.6%. Market momentum has returned to the upswing,” they said. added.
