Rebounding AI stocks lift Wall Street

Detailed summary

A rebound for stocks in the artificial-intelligence industry is lifting the U.S. market on Wednesday.

NEW YORK — A rebound for stocks in the artificial-intelligence industry is lifting the U.S. market on Wednesday.

The S&P 500 rose 0.9 per cent and was on track for a third gain in four days since its wipeout last week on worries about a potential slowdown in the construction of AI data centers. The Nasdaq composite rallied 1.4 per cent, but stocks outside of AI weren’t doing as well. The Dow Jones Industrial Average was down 56 points, or 0.1 per cent, as of 9:35 a.m. Eastern time.

One of the stocks at the center of the AI industry’s manic recent swings helped lead the way. CoreWeave, which rents out access to AI chips to customers over the cloud, leaped 10.7 per cent after reporting a smaller loss for the latest quarter than analysts expected.

It also made announcements that could allay some of the many worries dogging it and the wider industry. For one, concerns are high about how CoreWeave and other companies will handle higher interest rates in the bond market, which make borrowing money more expensive.

CoreWeave CEO Michael Intrator said his company has roughly US$9 billion in customer prepayments and deposits expected in the next three months, along with other sources of cash to help pay its bills. That had some analysts saying it’s making progress toward being able to self-fund its business.

For another, worries have been rising about a potential slowdown in the overall industry given longstanding worries about whether AI will produce enough profit and productivity to make the big investments worth it.

Such concerns hit a higher level following sweeping victories for Democrats in last week’s U.S. midterm elections. The worry is that Democratic control of statehouses across the country could lead to restrictions on construction of further AI data centers and the industry broadly.

But CoreWeave suggested strength is continuing, at least for now, and it raised its forecast for how much revenue it expects to make this year.

Of course, many challenges remain for…

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