Investors' appetite for risk has returned: AI sector stocks started the week on an upswing

Shares of companies in the artificial intelligence sector received a boost on October 26 thanks to AI startup Anthropic’s filing for an IPO, just ahead of a wave of key corporate earnings reports for the sector, according to Barron’s. The iShares Semiconductor ETF, which tracks semiconductor stocks, jumped nearly 3%. Nvidia shares rose 2.4%, Micron’s 3%, Broadcom’s 2.3%, and Advanced Micro Devices’ 2.8%.

The Nasdaq Composite Index, which has a high concentration of technology companies, rose 0.8% following a sharp decline last week. The broad-market S&P 500 index gained 0.7% on the day, while the Dow Jones Industrial Average, a blue-chip index, rose 0.3%. Most stocks and sectors in the U.S. market ended trading on October 26 in positive territory, but AI infrastructure was the biggest winner, according to Barron’s. Shares of companies in the optical networking sector, chipmakers, and energy and industrial firms—which are benefiting from massive demand driven by the construction of AI infrastructure—rose after Anthropic filed for an IPO.

“All eyes are on Anthropic’s prospectus today, so I’d say the market has shifted slightly toward optimism again,” Jay Powers, chief investment officer at RWA Wealth Partners, told Reuters. “But there’s a lot of information in the documents that have been released. It will be interesting to see how the market reacts to the company once its shares actually start trading.”

“The market needed this just as much as it needed SpaceX,” CNBC quotes Jay Woods, chief market strategist at Freedom Capital Markets, as saying. “Anthropic’s IPO significantly bolsters confidence [in the industry], and I expect there to be demand because investors have been waiting for this company for a long time and have been talking about it a lot.”

Hyperscalers, including Microsoft, Amazon, and Alphabet, will report their earnings this week. They either provide infrastructure to Anthropic, invest in the startup, or compete with it, noted Evercore ISI analyst Mark Mahaney.

“Anthropic’s prospectus contains important data on the overall growth in demand for AI, the required computing power, and the business economics of such labs. All of this is critically important for hyperscalers,” Barron’s quotes Mahani as saying. — “Overall, the financial implications for hyperscalers—who are both suppliers and investors in Anthropic—appear positive based on the disclosures in the prospectus.”

Last week, concerns about Meta’s expenses triggered a sell-off in AI stocks, so investors will be watching this earnings season particularly closely, Barron’s notes. Meta’s stock fell 1.9% on Monday after the company announced plans to raise up to $95 billion through a stock offering to finance the expansion of data centers, cloud computing capacity, and other AI-related infrastructure.

Although AI remains in the spotlight, investors will also be watching the outcome of the Fed’s two-day meeting, which begins on Tuesday. This by no means signals an end to the concerns surrounding AI stocks that have gripped Wall Street in recent weeks, but with earnings season approaching, investors are ready to latch onto any positive sign, notes Barron’s.

This article was AI-translated and verified by a human editor