US markets rally as tech stocks look to boost AI capabilities
US markets closed higher on Wednesday, as tech stocks reaped the benefits of investors once again brushing off fears of an AI bubble.
Tech stock share prices boomed, following reports from Bloomberg that Open AI is close to finalising the first phase of a new funding round, which is expected to bring in more than $100bn (£74bn), according to people familiar with the matter.
The record-breaking financing deal would give the start up additional capital to build outs its AI tools, which could lead the company’s valuation to exceed $850bn.
The S&P 500 inched up 0.56 per cent to 6,881.31, while the tech-heavy Nasdaq gained 0.78 per cent, trading at 22,753.63.
The Dow Jones also creeped up 0.26 per cent to 49,662.66, with chip makers who are reported to be taking part in the funding round, driving the gains.
Tech stocks jump
The first portion of the funding will largely come from strategic investors, including Amazon, Softbank, Nvidia and Microsoft.
If those companies invest near the higher ranges of what has been discussed, the commitments will near $100bn, with the companies expected to finalise their allocations by the end of the month.
Distribution giant Amazon reported a 2.2 per cent rise, trading at $205.79, while both Microsoft and Nvidia saw their share price also be bolstered by separate announcements.
Nvidia increased 1.63 per cent, reaching $187.98, as investors flocked to the stock after leading tech conglomerate Meta, which operates Facebook and Instagram, announced it was deepening its partnership with Nvidia.
Meta confirmed it will use of millions of Nvidia chips in its data centre expansion and growing its infrastructure footprint.
Microsoft also inched up 0.56 per cent to $399.60, after the tech conglomerate’s share price was boosted by its announcement that it would invest $50bn to expand AI capabilities in the ‘Global South’.
The company is set to advance its AI infrastructure and innovation to address needs in the region.
Patrick Munnelly, partner of market str at Tickmill Group, said Tech stocks made a strong comeback, signalling that concerns about AI-related disruptions might be easing.
“Many investors saw the situation as an opportunity to buy, further buoying market sentiment. Adding to the optimism were reports that OpenAI is close to wrapping up the initial phase of a fundraising round that could push its valuation beyond $100bn.”
Matt Britzman, senior equity analyst, noted that Thursday looked to be an “even stronger session” after the tech sector shook off AI jitters, but the “mood cooled after the release of the Fed’s latest meeting minutes”, as the body struggled to find consensus on where rates should go.
Asian markets rally
Asian markets also rallied, as global tech stocks detached from the concentrated US markets, tracked Wall Street’s gains.
South Korea’s Kospi jumped 3.09 per cent to 5,677.25, a fresh record high. The index has rocketed 31.7 per cent this year to date, as it continues to receive an influx of investors who want to tap into the country’s tech capabilities.
Tech heavyweights Samsung and SK Hynix led the rise, increasing by 3.56 per cent and 1.59 per cent respectively.
The Nikkei 225 also inched up 0.25 per cent, buoyed by Softbank’s expected investment into Open AI, rising 2.6 per cent to 4,440 yen (£21.23).