Tech stocks on Wall Street surged on Friday, defying worries about inflation and posting their biggest gain in over two months. This market rally was fueled by blockbuster first-quarter earnings from major companies, as well as continued optimism around artificial intelligence investments. The Nasdaq, which is the benchmark index for tech companies, rose by 2%, hitting its highest point since February 22, while the S&P 500 increased by 1%.
Microsoft and Alphabet both reported strong first-quarter earnings that exceeded Wall Street expectations. Microsoft recorded $61.9 billion in revenue, while Alphabet ended the quarter with $80.5 billion in sales. Following these earnings reports, Microsoft shares were up 2% to $408 per share, while Alphabet surged more than 10% to $175 per share, reaching a record $2.2 trillion market valuation. Alphabet also announced a cash dividend of $0.20 per share and a $70 billion stock buyback plan.
Amazon saw a 3.5% gain after ending its two-day losing streak, with shares trading at $180 per share. Investors are positioning themselves in the tech giant ahead of the April 30 earnings report, which is expected to show earnings per share of 82 cents, up from 31 cents a year ago. Additionally, Nvidia’s shares rallied 6.2% to $877 per share, recovering from recent sell-offs and marking its biggest daily gain since March 12, as its biggest clients continue to invest in artificial intelligence.
Investors gained a total of $317 billion on tech stocks following Friday’s rally. The earnings reports from Microsoft and Alphabet highlighted their commitment to artificial intelligence. Microsoft CEO Satya Nadella mentioned the company’s AI accelerators, including the latest from Nvidia, while Alphabet CEO Sundar Pichai cited the company’s industry-leading portfolio of NVIDIA GPUs alongside its in-house TPUs during the first-quarter earnings call.
Inflation remained unchanged at 2.8% in March, which was higher than the consensus economic expectations of 2.7%. This figure added to concerns about the economy, which had already shown slow growth at the beginning of the year. Stock investors typically look for strong earnings growth as an indicator of a company’s potential to generate future cash flows and sustain capital gains and dividend payouts. With big tech companies like Microsoft and Alphabet beating earnings estimates, Amazon expected to show increased sales, and Nvidia continuing to see strong demand for its AI hardware, investors are optimistic about the growth potential of these companies.
