Investors are buying into AI and Musk: Morning Brief every way they can

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The broadening of the stock market rally has not yet arrived, as investors continue to pile into (just about) everything AI touches.

Elon Musk revealed earlier this week that Super Micro (SMCI) will provide hardware for the supercomputer his AI startup is building. That caused a pop in the shares.

When the CEO of Dell (DELL) said his company would build an “AI factory” for Musk’s xAI in partnership with AI kingpin Nvidia (NVDA), stocks also rose.

And while the jumps in both names were short-lived, their performance this year and the response to Musk’s one-word message is a reminder that what he says matters to a lot of people and that anything related to AI will move the markets .

So far this year, SMCI is up more than 200%. Dell, which some say is harking back to a PC 1.0 world, has seen its shares almost double.

It doesn’t take a contrived plan or a sideways approach to capitalize on Wall Street’s excitement around AI technology. The main driver for 2024’s seemingly unstoppable run is the earnings potential of the Magnificent Seven, which also includes Nvidia, Tesla and the platform giants.

Analysts at Citi, who raised their target for the S&P 500 to 5,600 earlier this week, noted that more than two-thirds of the stock market’s gains so far have come from the Magnificent Seven.

And adding Elon to the mix certainly can’t hurt.

The Super Micro news has a clear Musk dimension, and part of the multi-CEO’s dynamic is that his companies span different sectors and are themselves interconnected. But since Tesla is the only publicly traded Musk company, most investors can only get into his other ventures indirectly. If you can’t buy xAI, why not acquire some of its suppliers?

CANNES, FRANCE - JUNE 19: Elon Musk attends the session 'Exploring the New Frontiers of Innovation: Mark Read in Conversation with Elon Musk' during the Cannes Lions International Festival Of Creativity 2024 - Day Three on June 19, 2024 in Cannes, France.  (Photo by Marc Piasecki/Getty Images)

Elon Musk attends the session ‘Exploring the New Frontiers of Innovation: Mark Read in Conversation with Elon Musk’ during the Cannes Lions International Festival Of Creativity 2024 – Day Three on June 19, 2024 in Cannes, France. (Marc Piasecki/Getty Images) (Marc Piasecki via Getty Images)

A similar dynamic is at play in the world of AI.

The AI ​​rally also extends beyond hardware manufacturers. Investors trying to create a makeshift Musk basket of related tech companies are doing the same with Nvidia. Because it’s not just the Big Tech platforms producing apps and productivity software that are spawning the exuberance of AI. There is a whole ecosystem.

Powering the computer systems that train and run AI systems requires enormous amounts of energy. Utilities are riding the AI ​​wave.

Amazon (AMZN), Alphabet (GOOGL), Microsoft (MSFT) and Meta (META) are expected to spend a combined $200 billion this year on cloud and AI investments, including building and running data centers. In turn, energy demand from U.S. data centers is expected to more than double by 2030, partly due to AI, according to estimates from consulting firm McKinsey.

Getting up early is nice. But the AI ​​frenzy proves that getting in at all is more than enough.

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Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.

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