Wall Street Sees Gains in AI Superstars Despite Broader Market Decline
The US stock market witnessed a mixed performance on Monday, with AI-focused companies such as Nvidia, Amazon, and Palantir Technologies driving gains, while the majority of stocks in the S&P 500 index declined. The Standard & Poor’s 500 rose 0.2%, inching closer to its all-time high, despite the Dow Jones industrial average dropping 226 points, or 0.5%, and the Nasdaq composite climbing 0.5%.
Nvidia was the strongest force behind the S&P 500’s gains, with its stock rising 2.2% and bringing its year-to-date gain to 54.1%. This surge is attributed to the growing demand for AI-powered technologies and Nvidia’s position as a leading provider of graphics processing units (GPUs) and high-performance computing hardware. Amazon also made significant gains, rallying 4% after announcing a $38-billion agreement with OpenAI to provide cloud computing services for the latter’s AI workloads.
AI-Related Stocks See Significant Gains
Other AI-related stocks also saw substantial gains, with IREN, an AI cloud service provider, jumping 11.5% after Microsoft announced a $9.7-billion contract that will give the tech giant access to some of Nvidia’s chips. Palantir Technologies, which has seen a stunning 165% gain for the year so far, rose another 3.3% ahead of its quarterly results report. These gains have led to concerns that the broad US market, and AI stocks in particular, may be becoming overvalued and potentially inflating into a dangerous bubble similar to the 2000 dot-com bust.
However, companies have largely been meeting high expectations for profits, with four out of every five companies in the S&P 500 topping analysts’ forecasts so far this reporting season, according to FactSet. With roughly two-thirds of all S&P 500 reports in, companies in the index are on track to deliver healthy growth of nearly 11% versus a year earlier. This suggests that the gains in AI stocks may be justified by their strong performance and growth prospects.
Losers and Winners in the Market
On the other hand, some companies experienced significant declines, with Kimberly-Clark dropping 14.6% after announcing its intention to buy Kenvue in a deal valuing it at $48.7 billion. Beyond Meat also tumbled 16% after delaying its quarterly results report to November 11, citing the need for more time to assess a non-cash charge related to issues with some of its assets. In contrast, Kenvue, which sells Tylenol, Band-Aids, and Listerine, jumped 12.3% following the announcement.
In the bond market, the yield on the 10-year Treasury edged down to 4.10% from 4.11% late Friday. A discouraging report on US manufacturing showed that activity shrank more than expected last month, with several manufacturers citing President Trump’s tariffs as a major concern. The report highlighted the challenges faced by the US manufacturing sector, with many companies experiencing financial strain due to the tariffs.
Global Market Performance
In stock markets abroad, indexes were mixed in Europe, following a stronger finish in Asia. South Korea’s Kospi jumped 2.8% to another record, with SK Hynix soaring nearly 11% after recent moves to team up with Nvidia in developing the country’s artificial intelligence infrastructure and capabilities. South Korean shipbuilders also rose after China announced that it would cancel added port fees on US-invested or US-flagged vessels, following a meeting between President Trump and Chinese leader Xi Jinping.
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