Investors analyzed the most recent financial reports and interpreted their implications on the ongoing economic recovery. As artificial intelligence (AI) sees increased adoption, investors anxiously awaited to see whether this would drive technology stocks to new heights. A company deeply integrated in the AI space delivered solid results and a blockbuster forecast which helped lift other stocks in the sector.
This then led Super Micro Computer to rise 1.6%, C3.ai to climb 3.4%, Taiwan Semiconductor Manufacturing to jump 6.8%, Symbotic to soar 9.2%, and SoundHound AI to surge 14.6% by the time the market closed on Thursday. Notably, regulatory filings, financial reports, and changes to analysts’ price targets did not drive these AI stocks higher, suggesting that investors were primarily drawn to the impact of AI on the quarterly financial results of Arm Holdings.
Arm Holdings reported the results of its fiscal 2024 third quarter (ended Dec 31.), with revenues up by 14% year over year and adjusted earnings per share (EPS) rising by 32% year over year. Both these results exceeded analysts’ estimates. But, Arm’s forecast for the current quarter, with an expected revenue range of $850 million to $900 million, well above Wall Street’s expectations of $778 million, truly captivated market watchers.
Furthermore, comments by CEO, Rene Haas’, that “AI is the most profound opportunity in our lifetimes”, helped Arm Holdings shares soar nearly 48%. As AI sees increasing adoption, it is evident that the AI boom could continue for quite some time.
The impact of these advances in AI on stocks is apparent. Each stock seems poised to benefit from these advances. Investors must not forget, however, that not all AI-centric companies are created equal and should therefore size their positions based on their risk tolerance and the degree of volatility they are prepared to withstand.