Axios Markets

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February 23, 2024

🌈 Happy Friday. Matt here. Today is my last edition of Axios Markets, as I'm off on a new adventure.

  • To be honest, investors may be relieved to see me go, as my tenure coincided with a rather gnarly β€” but action-packed!β€” two-year slump. Now, as I leave, the S&P 500 has decided to hit record highs.

πŸ˜€ Anyway, Emily, Kate and Felix β€” my brilliant, erudite, stylish, wonderful colleagues β€” will be back Monday to keep you in the know. And big thanks to Mike Allen and everybody at Axios for a great two years. Excelsior!

  • Let's do this. Today's newsletter is 786 words, a 3-minute read.

πŸ’₯ 1 big thing: The AI boom broadens

Data: FactSet; Chart: Axios Visuals
Data: FactSet; Chart: Axios Visuals

It isn't just Nvidia. A new cadre of hot stocks is riding the wave of excitement generated by the artificial intelligence boom, Matt writes.

Why it matters: The bull market has been running since October 2022, but the near-euphoria surrounding all things AI is adding fresh frisk to already frisky market sentiment. The S&P 500 closed at a record high yesterday.

State of play: A range of stocks linked to the buildout of AI infrastructure surged yesterday, in the aftermath of another remarkable quarterly report from Nvidia.

The intrigue: Nvidia wasn't even the biggest winner yesterday. That prize goes to the niftily named Super Micro Computer, which makes high-end servers to fill the racks in AI-dedicated data centers. It surged over 30% on the day. Also on the move...

  • Advanced Micro Devices, considered Nvidia's main rival in AI-oriented graphics processing units (GPUs), added nearly 11%. GPUs have long been used for rendering images in video games, but also serve as the backbone of artificial intelligence applications.
  • Synopsys, which makes software that's used for designing chips, surged around 7%.
  • Silicon Valley chip maker Marvell Technology jumped 6.6%.

The big picture: Yesterday's surge followed in the wake of another massive quarter for Nvidia, which it reported Wednesday after the close of trading.

  • Sales tripled to an absurd $22.10 billion.
  • Profits rose almost 800% to $12.29 billion.
  • The stock rose over 16% yesterday, adding more than $250 billion in market value in a single day.

What they're saying: In a note on Nvidia's results, Goldman Sachs analysts suggested demand for AI infrastructure shows no signs of slowing.

The bottom line: Stand back, the AI engine is really chugging, pulling the rest of the market behind.

2. Catch up quick

πŸŒ• Space company Intuitive Machines became the first business to land a private spacecraft on the moon. (Axios)

✈️ American Airlines must face lawsuit over ESG investing, Texas judge rules. (Reuters)

😬 How Lyft CEO David Risher communicated through the typo crisis. (Axios)

3. AT&T's big network fail was a remote work triumph

Illustration of multiple text speech bubbles on a screen

Illustration: Sarah Grillo/Axios

The big AT&T network outage was a productivity catastrophe for commuters across the country yesterday, but remote workers were totes fine, Bloomberg reported.

State of play: Without cellular access on their train rides, commuters apparently resorted to reading books β€” the paper kind! β€” instead of making calls, checking email, frantically Slacking, etc., Emily writes.

  • Travel to and from meetings was also disrupted β€” without Google or Apple Maps guiding the way, people got a bit lost.
  • "Missed meetings, frustrated clients, staffers left in the dark β€” the outage sent American workers into a tailspin."
  • Back at home, remote workers with WiFi continued to blissfully distract themselves (I mean, be productive).

The big picture: The outage was less of an issue once folks were at the office, but underlined how commutes generally drain worker productivity β€” even when phones are working.

The bottom line: The disruption was also a nice reminder of why work-from-home grew popular in the first place.

  • Show this to your CEO next time they order folks back to the office.

4. 🎒 Matt's farewell: Phew, that was a lot

S&P 500
Data: FactSet; Chart: Axios Visuals

The S&P 500 is only 7% higher than when I joined Axiosβ€”pretty meh.

Why it matters: That pittance masks a tumultuous two years.

Flashback: Since the start of 2022, we've seen...

Between the lines: People who don't spend a lot of time watching or thinking about financial markets often think of them as an agglomeration of numbers: Profits, losses, share prices and percentages.

Reality check: That's only partly true. Sure, numbers are there. But I think of the markets as the domain of storytellers.

  • It's not just numbers that are moving Nvidia's share price. Those admittedly impressive results are a way of telling a story about the rise of AI as a real economic force. As you can see from its almost absurd share price growth, people are buying into that story.
  • They might be right. But over time it might turn out that they were sold on unrealistic expectations.

The bottom line: That's what makes markets so fascinating to cover. They're deeply human institutions. It's been a pleasure watching them with you.

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Axios Markets is edited by Javier E. David and copy edited by Carolyn DiPaolo.