Tesla, Nvidia rate cuts lead tech stocks to have one of their best days in 2024 | Wilnesh News

A day after the Federal Reserve cut its benchmark interest rate for the first time since 2020, investors piled into technology stocks at the fastest pace this year.

The stock price rose 7.4%, driven by Tesla and a 4% jump NVIDIAOn Thursday, the Nasdaq rose 2.5%, its fourth-largest gain of 2024.

Lower interest rates tend to benefit technology stocks, as lower borrowing costs and bond yields make venture capital more attractive. In addition to the central bank cutting interest rates by half a basis point, the Federal Open Market Committee also stated through its “dot plot” that it will cut interest rates by another 50 basis points by the end of this year, ultimately reducing interest rates by 2 percentage points from Wednesday’s rate cut.

While the Nasdaq has risen steadily this year on enthusiasm for Nvidia and artificial intelligence, Thursday’s gains pushed the benchmark to its highest level since mid-July. The Nasdaq peaked at 18,647.45 points on July 10 and is currently only 3.5% below that level, closing at 18,013.98 points.

Nvidia, whose processors are powering the generative AI boom and services like OpenAI’s ChatGPT, rose 4% to $117.87 on Thursday. The stock is up about 138% this year after more than tripling in 2023, but remains 13% below its all-time high set in June.

Nvidia relies on a relatively small customer base—i.e. Microsoft, Yuan, letter, Amazon, Oracle OpenAI – The revenue is huge because these companies either develop large language models, host large AI workloads, or both. Any sign of softening demand would raise concerns about Nvidia stock.

But lower interest rates are seen as another potential benefit.

Fellow chip manufacturers AMD and Broadcom They also rose sharply on Thursday, rising 5.7% and 3.9% respectively. AMD is trying to challenge Nvidia in the artificial intelligence market, but it’s lagging far behind and raising some skepticism on Wall Street. The stock is up only about 6% this year.

AMD CEO Lisa Su told CNBC’s Jim Cramer on Wednesday that artificial intelligence is a long game and we’re in the early stages.

“Let’s not be impatient. Technology trends should last for years, not months,” Su said. “We’ve only been in the ChatGPT world for about 18 months. We’re all learning. It’s fun. We’re all using it.”

Artificial intelligence will enter “every aspect of our lives,” including education and drug development, Su said.

“The beauty of it all is that you need to calculate, and that’s exactly what we did,” Su said.

Tesla was the biggest gainer among tech giants on Thursday, rising 7.4%. The electric car maker has lagged this year, down nearly 2%, compared with the Nasdaq’s 20% gain. However, Tesla shares are up 72% from the year’s low in April.

Among other top technology companies, apple and Yuan They also rose sharply at the close, both up nearly 4%.

watch: Cramer was interviewed by AMD CEO Lisa Su