Philadelphia Independent - AI Stock Rebound Lifts Wall Street as CoreWeave Surges

A rebound in artificial intelligence stocks lifted U.S. equity markets on Wednesday, reversing recent losses triggered by concerns over industry profitability and interest rates. The S&P 500 rose 1.6 percent, marking its third gain in four days following a wipeout last week. The Nasdaq composite rallied 2.2 percent, while the Dow Jones Industrial Average climbed 243 points, or 0.5 percent, as of 1:38 p.m. Eastern time.

CoreWeave, a company that rents access to AI chips over the cloud, led Wall Street with a 26.5 percent surge after reporting a smaller quarterly loss than analysts had expected. The company also announced measures aimed at alleviating concerns about its financial stability in a high-interest-rate environment.

CoreWeave CEO Michael Intrator stated that the company has approximately $9 billion in customer prepayments and deposits expected within the next three months, along with other cash sources to cover operational costs. These disclosures prompted some analysts to note progress toward the company’s ability to self-fund its business.

The broader AI sector had faced heightened scrutiny regarding its long-term profitability and the sustainability of expensive infrastructure investments. These worries intensified following Democratic victories in last week’s U.S. midterm elections, raising fears that increased political control could lead to restrictions on the construction of new AI data centers.

Despite these challenges, CoreWeave raised its revenue forecast for the year above analyst expectations, suggesting continued strength in demand. The company’s results helped other industry stocks recover some of their recent declines. Micron Technology, a memory chip maker, rallied 13.7 percent, while Broadcom added 6.2 percent. GE Vernova, which provides power solutions for data centers, rose 2.6 percent.

In contrast, Nvidia, the chipmaker often viewed as the face of the AI boom, continued to fall due to issues unrelated to industry fundamentals. Its board is investigating CEO Jensen Huang after he admitted to a relationship with a businesswoman who allegedly provided intelligence and advanced chips to China.

Outside the technology sector, Fossil Group soared 26.9 percent after reporting stronger quarterly profits than expected and raising its annual revenue forecast. The watch and handbag retailer’s gains contrasted with mixed trading elsewhere on Wall Street, where only slightly more S&P 500 stocks rose than fell.

United Airlines lost 1.3 percent as rising oil prices weighed on the market. Brent crude added 1.8 percent to $93.13 per barrel, nearing the middle of its range since early this year when geopolitical tensions pushed prices higher. Higher oil prices typically increase bond yields, which can pressure interest-sensitive sectors.

The U.S. bond market was closed for Veterans Day, but yields had jumped the previous day following a worse-than-expected inflation report. This data raised expectations for future Federal Reserve interest rate hikes. Consequently, real estate stocks faced pressure, with homebuilders PulteGroup sinking 1.2 percent and D.R. Horton falling 1.7 percent.

Global markets also saw gains across much of Europe and Asia. South Korea’s Kospi index jumped 2.6 percent, one of the largest moves worldwide. Hong Kong’s Hang Seng was an outlier, falling 1 percent. In Shanghai, stocks rose 0.5 percent as China’s Singles Day shopping festival began, with sales data expected to provide insight into consumer spending in the world’s second-largest economy.

J.Young--PI