Tesla Stock Surges 10% on AI Potential, Increasing Market Value by $600B
Tesla, the leading electric car manufacturer, experienced a remarkable 10% surge in its stock price after Morgan Stanley upgraded the company’s rating to overweight from equal-weight. The financial institution predicts that Tesla’s market value could soar by nearly $600 billion, driven by its latest innovation – the Dojo supercomputer. This advanced technology is designed to train artificial intelligence (AI) systems, making Tesla an AI powerhouse in the automotive industry.
The soaring success of Tesla has also influenced the performance of other mega-cap stocks. Amazon shares climbed 3.5%, while Microsoft witnessed a gain of over 1%. Meta Platforms, the social media giant, saw a jump of more than 3% following reports of its development of a more powerful AI system. The positive movement of these key players indicates a growing interest in AI technology across various sectors.
Investors are now turning their attention to the forthcoming release of the consumer price index data for August, scheduled for Wednesday. Kevin Mahn, Chief Investment Officer at Hennion & Walsh Asset Management, anticipates that the report will reveal an increase in inflation, primarily driven by rising oil prices. Mahn suggests that this could potentially push the Federal Reserve to raise interest rates at least once more. However, he expresses concern about the implications of such a move on U.S. consumers, as it could escalate the cost of debt servicing for both individuals and the federal government.
The ramifications of interest rate hikes on consumer spending form a significant consideration, as approximately 70% of economic growth in the United States stems from consumer expenditure. With U.S. consumers accumulating over $1 trillion worth of credit card debt and facing record-high interest rates of over 24%, there is a possibility that their reduced personal savings could hinder economic growth. Should consumers shift their focus from spending to servicing their outstanding debt, the nation may find itself on the brink of a recession, warns Mahn.
In other news, Walt Disney witnessed a modest rise of about 1%, and Charter Communications experienced an increase of roughly 3% after reaching an agreement that would allow Disney’s programming, including ESPN, to be available on the Spectrum cable service once again. The deal was struck just hours before the much-anticipated NFL Monday Night Football event kick-started.
Furthermore, Qualcomm, the renowned chipmaker, saw its shares rise by nearly 4% following the news of a new agreement to supply 5G chips to Apple until at least 2026. This partnership solidifies Qualcomm’s position as a key provider of essential technology to one of the world’s leading smartphone manufacturers.
On another front, Hostess Brands witnessed a staggering surge of 19% after J. M. Smucker, the renowned jelly giant, announced its decision to acquire the Twinkies-maker in a colossal $5.6 billion deal.
Overall, the stock market remained vibrant, with the Dow experiencing a modest 0.25% rise, the S&P 500 gaining nearly 0.7%, and the Nasdaq witnessing an impressive surge of over 1%. These positive developments indicate the growing influence and potential of AI technology in various industries, promising exciting opportunities for investors and consumers alike.