Investors in AI stocks seem to be unfazed by the hawkish policy of the Federal Reserve. Despite the central bank’s announcement of further rate hikes this year, investors are racing to buy shares in their favorite AI-related stocks. On Wednesday, the Federal Open Markets Operation Committee (FOMC) left interest rates unchanged and reaffirmed its commitment to pursue price stability as its top priority goal. However, the committee is set to increase the benchmark Federal Funds Rate, bringing it up to 5.60% by the end of the year.
Inflation remains above the official target of 2%, and the Fed’s top concern is the tightness of the labor market and potential wage pressures that could result in another round of price hikes. While some analysts believe the Fed’s policy is quite hawkish, investors seem to disagree, chasing after every AI-related stock and buying shares even in the dips.
AI leader Nvidia gained $20 dollars, and the NASDAQ closed with a 53-point gain as investors seized the opportunity to buy shares of their favorite AI stocks in the dips. Despite the initial selloff, the stock market soon recovered, as investors are more bullish than ever before on AI-related technologies.
While some analysts believe that the Fed’s message is clear that they are not yet finished with interest rate hikes, Wall Street is unmoved, and investors are excited about the prospects of AI. The head of market intelligence at TradeStation stated that the Fed has room to crush inflation, given the strong labor market, and they don’t want to miss their chance. He thinks policymakers skipped hiking rates so they could monitor the data, which increases the importance of each incremental economic report.
Investors in AI stocks are apparently not worried about the Fed’s successive rate hikes, as they remain hopeful for these emerging technologies’ bright future. While some analysts remain cautious, others think that even the Fed could take a dovish turn later in the year, depending on the data. Regardless of the underlying fundamentals, emotion and sentiment remain potent forces in the stock market, prompting people to invest based on a bullish outlook for AI-related companies.
