Nvidia Corp. did something remarkable to set up a rally for its stock on Thursday, while lifting shares of other companies involved in new technology employing artificial intelligence.
Nvidia’s
NVDA,
big splash was to predict a 50% sequential increase in quarterly sales, with CEO Jensen Huang tying that expectation to a “killer app,” a term he now applies to the company’s graphics processing units (GPUs) used in data centers that support companies’ efforts to roll out their new AI-enabled products and services.
In an interview with Therese Poletti, Nvidia CFO Colette Kress explained how “the inflection on AI and accelerated computing” helped drive the company’s revenue forecast.
The company’s stock rose 24% on Thursday, when the S&P 500
SPX,
was lifted nearly 1%. A list of Thursday’s 20 strongest performers in the benchmark index is below — it is dominated by tech stocks showing gains of 5% or more for the session.
The action propelled several AI-themed exchange-traded funds.
Nvidia appears to be “pricey” even to analysts who love the stock, with a forward price-to-earnings ratio of more than 50. But the type of growth the company expects is always expensive, and a stock such as Amazon.com Inc.
AMZN,
which has been such a strong performer for so long, has traded at an average forward P/E ratio of 67.5 over the past 10 years.
Click here for a closer look at Nvidia’s price ratios, the heavy weighting for its stock and other major AI players such as Microsoft
MSFT,
and Alphabet
GOOGL,
GOOG,
in the S&P 500 and the Russell 1000 Growth Index
RLG,
and other ways to play the AI trend.
The Ratings Game:
- ‘Unprecedented’ and ‘unfathomable’: Nvidia makes jaws drop on Wall Street as stock explodes higher.
- Why Intel’s stock is falling as Nvidia leads the rest of the semiconductor sector on a massive surge
In an interview, Ken Laudan of Buffalo Funds cautioned that any discussion of AI as an investment theme needed to encompass “regulations and boundaries,” because the new technology “has a potential to get out of hand.”
In a blog post Thursday, Microsoft Corp. President Brad Smith wrote that the federal government should create a new agency to oversee the deployment of the new technology to “ensure that AI remains under human control.”
Here are the 20 best performers among the S&P 500 on Thursday — most are in the technology sector, and the two real-estate investment trusts on the list own data centers:
| Company | Industry | Ticker | May 25 price change | 2023 price change | 2022 price change | Forward P/E |
| Nvidia Corp. | Semiconductors |
NVDA, |
24% | 160% | -50% | 50.1 |
| Monolithic Power Systems Inc. | Semiconductors |
MPWR, |
17% | 38% | -28% | 38.4 |
| Advanced Micro Devices Inc. | Semiconductors |
AMD, |
11% | 86% | -55% | 35.8 |
| Arista Networks Inc. | Computer Peripherals |
ANET, |
11% | 29% | -16% | 25.3 |
| Cadence Design Systems Inc. | Software |
CDNS, |
10% | 40% | -14% | 41.9 |
| Synopsys Inc. | Software |
SNPS, |
10% | 36% | -13% | 37.5 |
| Broadcom Inc. | Semiconductors |
AVGO, |
7% | 30% | -16% | 16.6 |
| Adobe Inc. | Software |
ADBE, |
7% | 17% | -41% | 23.8 |
| Applied Materials Inc. | Industrial Machinery |
AMAT, |
7% | 34% | -38% | 18.1 |
| Dish Network Corp. Class A | Cable/ Satellite TV |
DISH, |
7% | -52% | -57% | 8.5 |
| Digital Realty Trust Inc. | Real-Estate Investment Trusts |
DLR, |
7% | -8% | -43% | 84.6 |
| Lam Research Corp. | Industrial Machinery |
LRCX, |
6% | 43% | -42% | 22.8 |
| KLA Corp. | Semiconductors |
KLAC, |
6% | 15% | -12% | 21.2 |
| Oracle Corp. | Software |
ORCL, |
6% | 28% | -6% | 18.4 |
| ServiceNow Inc. | Software |
NOW, |
6% | 37% | -40% | 51.0 |
| Ralph Lauren Corp. Class A | Apparel/ Footwear |
RL, |
5% | 8% | -11% | 12.0 |
| Eaton Corp. PLC | Electrical Products |
ETN, |
5% | 13% | -9% | 20.0 |
| MetLife Inc. | Multi-Line Insurance |
MET, |
5% | -27% | 16% | 6.2 |
| Equinix Inc. | Real-Estate Investment Trusts |
EQIX, |
5% | 8% | -23% | 74.4 |
| Micron Technology Inc. | Semiconductors |
MU, |
5% | 39% | -46% | N/A |
| Source: FactSet | ||||||
Click on the tickers for more about each company.
Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.
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