Enthusiasm for artificial intelligence is spreading across the stock market.
Nvidia's (NVDA) earnings call Wednesday night marks one year since the chipmaker first shocked Wall Street with demand for its AI chips. Since then, mentions of AI in earnings calls have skyrocketed, increasing 186% from the first quarter of 2023, according to Bank of America Research.
This comes as the conversation around AI has rapidly shifted from AI chipmakers like Nvidia (NVDA) and AMD (AMD) to AI power users like Alphabet (GOOG, GOOGL), Meta (META), Amazon (AMZN) and Microsoft (MSFT). More recently, strategists have highlighted an expansion into other sectors that could benefit from rising power usage, including energy (XLE), utilities (XLU) and commodities.
“It's no longer just about NVDA,” Ohsung Kwon, U.S. and Canadian equity strategist at Bank of America, said in a note to clients on Monday.
This change is already underway in the market. Several precious metals, including copper (HG=F), which strategists say will benefit from AI investments, have hit recent highs. The utilities and energy sectors have been two of the best-performing sectors in the S&P 500 (^GSPC) this year, rising approximately 15% and 13%, respectively.
This has spilled over into individual stocks, with Nvidia's meteoric share price rise since early 2024 matched by Texas-based Vistra Corporation (VST), which is up about 140% this year, and Constellation Energy ( CEG) stock is up nearly $90. %, which roughly matches his Nvidia rise this year.
Morgan Stanley Chief Investment Officer Mike Wilson named utilities an overweight sector in a note on Sunday, noting that it brings “upside to the AI ​​power theme.” Wilson said Morgan Stanley's Power & Utilities team is confident that new AI data centers, 50 times larger than before, will increase electricity consumption from 3% of total U.S. consumption in 2023 to about 10% by 2030. He emphasized that he thought it was possible.
“Increasing demand for AI data center power and more favorable data center power deals could see upside adjustments for both traditional and alternative energy providers,” Wilson wrote.
Companies are also playing a role in building AI.
Research by Goldman Sachs' equity strategy team, led by David Kostin, found that mentions of AI spiked in the first quarter. More than 66% of companies in the energy sector mentioned AI in their financial results briefings this quarter, up from 19.1% in the previous quarter.
Considering the big-picture implications, investors will likely keep an eye on Nvidia's report on demand for AI chips.
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So far, Nvidia has surprised investors in this space time and time again, consistently beating analyst expectations with quarterly results and boosting its outlook for next quarter on the back of solid demand for AI servers. There is.
Whether this trend continues or breaks down may have implications for a variety of fields.
“If the market wakes up and says, 'Maybe I got a little too excited. Maybe I brought forward some of my earnings a little bit,' that will be reflected in the valuation.” Asset Management Global Market said. “I think it could be a bit of a volatile path there,” strategist Jack Manley told Yahoo Finance.
The Nvidia Corporation logo appears on the smartphone screen, with a graphic representation of the stock market in the background. (Rafael Henrique/SOPA Images/LightRocket via Getty Images) (SOPA Images via Getty Images)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X translator.
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