AI continues to dominate
Equity markets were mostly flat during the start of this news-packed week. Investors have a lot on their plates. With several multi-trillion US-dollar market-cap companies publishing results this week, we are at the peak of the earnings season.
Central banks were also active. As expected, Federal Reserve Chair Jerome Powell delivered another interest rate cut. Powell, however, was cautious regarding the weakening state of the jobs market. This makes an additional cut in December less certain and, as such, will likely remain a topic for the rest of the year. Meanwhile, US President Donald Trump and President of China Xi Jinping appear to have had a successful meeting with each other, de-escalating the tensions between the two economic powers.
But it’s artificial intelligence (AI) that continues to drive equity markets. Nvidia reached yet another milestone this week when it broke the USD 5-trillion market cap. There has recently been a string of announcements from the chipmaker, related to partnerships ranging from health care company Eli Lilly to transport technology company Uber. And, this week the stock price of Nokia surged after Nvidia took a USD 1 billion stake in the telecommunications company.
The second-largest company in the world, Microsoft, was in the news a lot this week as well. The software giant benefited from the announcement that it will receive a 27% stake in OpenAI and will have access to OpenAI’s technology until 2032. It also posted solid quarterly results. However, the quarterly results of Meta failed to impress investors. It was not really the results themselves, but more the growing concern that the company might be overspending on AI initiatives. Finally, the financial results of Alphabet, the parent company of Google, continue to show strong momentum; in particular, the cloud unit fared well on the back of high demand from AI companies.