Stocks reached a new record high on Thursday, with the tech-heavy Nasdaq Composite also seeing its biggest monthly gain since April 2020.
Concretely, the index gained 15.29% in the month, largely buoyed by strong earning reports from tech giants including Alphabet, Amazon and Microsoft, all of which beat expectations for revenue and cloud growth. Apple’s revenue also exceeded analysts’ expectations.
CNBC noted that chip stocks also saw strong gains, with Micron and Advanced Micro Devices surging 53% and 74%, respectively. Nvidia also climbed 14%, capping the best month since June.
The Nasdaq Composite reversed what had been a negative year so far. It was down about 7% on the last day of month and is now up 7%.
The one tech giant that had a gloomy session was Meta, which is facing fresh skepticism on Wall Street after a major downgrade flagged concerns over the company’s ability to generate meaningful returns from its escalating artificial intelligence investments.
JPMorgan cut its rating on the stock to neutral from overweight and lowered its price target to $725 from $825, signaling limited upside ahead. The move came shortly after the company reported stronger-than-expected first-quarter results, but shares fell sharply following a significant increase in projected capital expenditures.
Meta said it now expects full-year capital spending between $125 billion and $145 billion, up from prior guidance of $115 billion to $135 billion. The revised outlook unsettled investors, sending the stock down more than 9% on Thursday.
Bloomberg has noted that growth in the artificial intelligence sector has managed to offset the impact of the Iran.
The U.S. economy expanded by 2% in the first quarter of the year, rebounding after the last three months of last year’s 0.5% increase.
The Commerce Department noted that the federal government’s spending and investment grew by 9.3% annual rate in the reported period, adding more than half a percentage point to growth.
Growth in consumer spending slowed to 1.6% in the same period, a 0.3% decrease compared to the previous quarter. The area accounts for 70% of the country’s economic activity.
However, business investment rose by 8.7%, likely boosted by spending in artificial intelligence. The outlook is being clouded by the economic impact of the war with Iran, which has caused oil prices to soar and has no end in sight.
Heather Long, chief economist at the Navy Federal Credit Union, said in a note that the U.S. is experiencing a “split-screen economy.”
“Companies and investors involved in AI are on fire. Meanwhile, middle and moderate income households are struggling with high gas prices,” she added, noting that consumption is also slowing “as people are struggling to manage all their bills and growing more concerned about the future.”
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