ASX set to fall, AI stocks drive Wall Street higher

Detailed summary

Leading the way on Wall Street was one of the stocks at the centre of the AI industry’s manic recent swings. CoreWeave, which rents out access to AI chips to customers over the…

A rebound for stocks in the artificial intelligence industry is lifting the US market.

The S&P 500 rose 1.3 per cent and was on track for a third gain in four days since its wipeout last week on worries about a potential slowdown for AI-related businesses. The Nasdaq composite rallied 1.9 per cent, but stocks outside of AI weren’t doing as well. The Dow Jones Industrial Average was up a modest 57 points, or 0.1 per cent, just before midday in New York.

The Australian sharemarket is set to decline, with futures pointing to a loss of 50 points, or 0.5 per cent, at the open. The ASX added 0.3 per cent on Wednesday. The AUstralian dollar was weaker at US68.48¢.

Leading the way on Wall Street was one of the stocks at the centre of the AI industry’s manic recent swings. CoreWeave, which rents out access to AI chips to customers over the cloud, leaped 25 per cent after reporting a smaller loss for the latest quarter than analysts expected.

It also made announcements that could allay some of the 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 $US9 billion ($13.1 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.

Worries have also 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 expensive investments worth it. Such concerns hit a higher level following sweeping victories for Democrats in last week’s US midterm elections.

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…

Opening of the article, excerpted from The Sydney Morning Herald. To read the rest, open the article on the publisher's site.