Days of declines won't keep AI trade down

On Monday, investors in the United States turned their attention back to artificial intelligence stocks, leading to a notable uptick in share prices. Nvidia saw a significant increase of 5.8%, while Broadcom rose by 2.6%, and Microsoft managed to climb 1.9%, breaking an eight-day losing streak—the company's longest since 2011. Market analysts are optimistic about a potential resolution to the ongoing U.S. government shutdown, with the Senate having approved a measure to fund and reopen the government. This bill must still pass through the House and receive the President's signature, but the signs are encouraging. Many are hopeful that this will help alleviate some of the pressure on the market. Despite the surge, concerns regarding the high valuations of AI companies persist. CoreWeave, a firm that rents Nvidia graphics cards to AI companies like Google and Microsoft, reported a striking 134% year-over-year increase in revenue for its third quarter. However, the company also recorded a net loss and issued a conservative forecast for the year, echoing the financial patterns seen in industry leader OpenAI, which has faced similar challenges. Mark Haefele, Chief Investment Officer of UBS's global wealth management, expressed confidence that AI-related stocks will play a pivotal role in driving equity markets moving forward. As the prospect of the government shutdown appears to be lifting, this could further bolster investor sentiment. Technology stocks led the gains on Monday, with major U.S. indexes experiencing a boost, particularly the Nasdaq Composite, which surged by 2.27%. In contrast, Asian markets saw a decline the following day, although shares in Chinese electric vehicle manufacturer Xpeng soared over 16%. In corporate news, SoftBank and Sony both exceeded fiscal second-quarter earnings expectations. SoftBank's Vision Fund reported a gain of $19 billion during this period, while Sony announced a significant share buyback worth up to 100 billion Japanese yen (approximately $648 million). In other developments, Federal Reserve Governor Stephen Miran suggested that a half-point rate cut would be suitable, as monetary policy should align with anticipated economic trends. Meanwhile, U.S. lawmakers are progressing with a deal to avoid a government shutdown, with the Senate taking the initial steps toward funding and reopening operations.