The technical picture on US stocks supports another attempt at higher levels.
The S&P 500 is trading at 5,505, and support is below at 5,451 and 5,400.
US computer chip maker Nvidia has become the world’s most valuable company after it reached an all-time high valuation of $3.34 trillion on Wednesday.
Markets have been watching a battle between Microsoft, Apple, and Nvidia. The latter is one of the key manufacturers of computer chips needed to power the artificial intelligence (AI) software buzz.
Daniel Bathurst, head of AI start-up Nscale, said Nvidia’s rise highlights just how prominent a sector AI has become. “Nvidia’s relentless rise to the top of the leaderboard illustrates a crucial point: powerful hardware is the foundation upon which the AI revolution is built,” he said.
“As AI continues to develop, collaboration and diverse innovation in every infrastructure element will be crucial to unlocking its full potential.”
The current valuation in US stocks is driven by the belief that the AI hype will lead to long-term profit. Research this week said that the ‘Magnificent Seven’ is now one of the most crowded trades on record. According to a new survey of hedge funds, hedge funds have continued to pile into the ‘Long Magnificent Seven’ trade, and $721 billion in assets has flooded into tech stocks.
According to Bank of America’s Global Fund Manager Survey, the ‘Long Magnificent Seven’ trade has remained the most crowded for the 15th month. The survey also said that 69% of fund managers now see it as the most crowded trade, versus just 51% in May.
The current US stock rally relies on AI hype, crowded hedge funds and low volume.