Tech Stock Rally Triggered by AI

On the 7th (local time), major U.S. big tech stocks surged significantly. Expectations for the expansion of the artificial intelligence (AI) market boosted investor sentiment, leading to an assessment that the month-long rally in tech stocks has resumed.

On that day, Alphabet's stock, listed on the New York Nasdaq Stock Exchange, closed at $138.45, up 5.34% from the previous session. It was the first time in over four months since July that Alphabet's stock rose more than 5% in a single day. On the same day, AMD's stock soared 9.89% to close at $128.37, the highest closing price since June ($129.19). Other large-cap tech stocks such as Nvidia (2.40%), Meta (2.88%), Amazon (1.63%), and Apple (1.01%) also showed nearly 3% gains that day.

[Image source=Reuters Yonhap News]

The simultaneous rally in tech stocks was driven by positive factors such as Alphabet's launch of its own AI model and AMD's upward revision of its AI semiconductor market outlook. Google unveiled a new large language model (LLM) called 'Gemini' the day before. Gemini, introduced by Google, is a competing model to ChatGPT's LLM 'GPT' and surpasses GPT-4, which is considered the most advanced LLM to date. In a test measuring reasoning ability by combining knowledge from 57 advanced subjects, Gemini scored 90.04%. In this test, human experts scored 89.8%, and OpenAI's GPT-4 scored 86.4%.

This development led to a reevaluation of Google's competitiveness, which had been considered the laggard among the three major camps: OpenAI and Microsoft (MS), the open-source camp led by Meta, and Google. The New York Times (NYT) commented, "Google, which has been striving to build technology comparable to OpenAI's ChatGPT for a year, has taken a significant step forward in the AI competition."

AMD also unveiled a new AI semiconductor poised to be a rival to Nvidia. At an investor event held the day before, AMD officially launched its latest AI chip Instinct 'MI300' series. Among this series, the graphics processing unit (GPU) MI300X is regarded as a competitor to Nvidia's H100, which currently dominates the AI chip market. Meta, MS, OpenAI, and Oracle announced on the same day that they would purchase AMD's new AI semiconductor.

AMD also projected that the AI semiconductor market will reach $400 billion by 2027. Ross Seymore, an analyst at Deutsche Bank, explained, "AMD emphasized its advantageous position in the rapidly expanding AI chip market by continuously strengthening customer partnerships and offering highly competitive products."

The Wall Street Journal (WSJ) described the rally as a resumption of the storm rally that tech stocks showed last month. The Nasdaq index, which had fallen to the 12,000 level at the end of October, turned upward reflecting expectations of the end of the Federal Reserve's tightening and interest rate cuts. The index rose 14% from last month's low. However, some retracement occurred as the stock prices of large-cap tech stocks at the top of the market capitalization turned downward, leading to a relatively sluggish trend until the 6th of this month.

This content was produced with the assistance of AI translation services.