A monster day for Microsoft’s stock following signals that its big spending on AI is translating into profits led a powerful rebound on Wall Street Thursday, while computer-chip companies regained some of their sharp recent losses. In the bond market, though, worries remained about inflation potentially remaining high for years.
The S&P 500 rallied 1.7% and more than recovered its drop from the day before, which was its worst in seven weeks. The Dow Jones Industrial Average jumped 613 points, or 1.2%. The Nasdaq composite, which is full of artificial-intelligence stocks, rallied 2.8% a day after it fell 9.8% below its record set last month.
Microsoft led the way and leaped 15.5% for its best day in nearly 18 years after reporting a stronger profit for the latest quarter than analysts expected. Growth was strong for its Azure cloud business, and CEO Satya Nadella said it reflects how customers are using Microsoft to move into AI.
Perhaps just as importantly for Wall Street, Microsoft did not announce a big increase in how much it plans to spend on AI investments, something that several other Big Tech rivals have done. Worries are high that such spending is eating into companies’ cash flows and may not ultimately be worth it if AI does not produce as much productivity and profits as promised.
