AI's Virtuous Cycle Fuels Market Growth and Tech Investments

Nvidia CEO Jensen Huang declares that the AI sector is in a 'virtuous cycle' of growth, as major tech companies like Amazon, Palantir, and Oracle see their stocks surge. The S&P 500 and Nasdaq Composite end October on a high note, with the latter climbing 4.7%.

Berkshire Hathaway Rebounds, Nvidia Hits $5 Trillion Valuation

Berkshire Hathaway reports a 34% year-over-year increase in operating profit to $13.485 billion in the third quarter, now holding a record $381.6 billion in cash. Meanwhile, Nvidia becomes the first company to reach a $5 trillion valuation, driven by the growing demand for AI technology.

"The virtuous cycle of AI is in full swing," says Huang, explaining that increased usage leads to more investment, which in turn improves AI, further boosting usage. This cycle is evident in the robust growth of Amazon's cloud-computing unit, which saw a 9.6% stock jump on Friday.

Market Performance and Investor Sentiment

The S&P 500 ends October 2.3% higher, defying 'Octoberphobia,' while the Nasdaq Composite climbs 4.7%. Traders who shorted the S&P 500 last month face unexpected losses. U.S. markets close higher on Friday, with the Nasdaq leading the way. In contrast, Europe's Stoxx 600 loses 0.51%, with most sectors declining.

China's AI Stance and Nexperia Export Ban

Huang downplays security concerns over chip exports to China, stating that Beijing's blocking of Nvidia's H20 chips signals it has 'plenty of AI technology.' Additionally, signs indicate that China may ease its export ban on Nexperia chips, a move that could impact the global semiconductor market.

Upcoming Earnings and Market Outlook

Investors look forward to earnings reports from Advanced Micro Devices and Palantir this week. The S&P 500 starts November more than 16% up for the year, with the Supreme Court case on Trump tariffs also on the radar. As AI spending continues to grow, online advertising remains a key driver of Big Tech's revenue, alleviating earlier concerns about economic turbulence.

References

• CNBC Daily Open: AI trade frenzy seems driven by a 'virtuous' cycle