Here is why Microsoft Corp is Leading the Surge in Tech Stocks 

Software giant Microsoft Corp has been leading a stock price surge among major tech and internet companies, with its share price hitting a record high on Wednesday.

This rally in large technology stocks has added around $1.5 trillion to the total market capitalization of the Nasdaq 100 index over the past few days, indicating that the recent scepticism about these highly-valued market leaders may be subsiding.

Microsoft stock surges on strong quarterly results 

According Janus Henderson Investors portfolio manager Jonathan Cofsky Microsoft ticks most boxes because of its robust business model. The software giant’s execution is currently running well and it appears to be the outright winner in artificial intelligence. Generally, Microsoft has the most cyclical tailwinds and minimal secular risks relative to other tech companies.

The stock has been on a surge for nine consecutive sessions, marking the longest rising streak in almost four years. Since the end of September, Microsoft shares have gained 15%, dwarfing the seven mega caps that have been the talk of 2023. The rise has led to a market cap of $2.7 trillion close to Apple Inc.’s market capitalization of $2.84 trillion. 

Results for the recent quarter triggered the surge in stock price. In a season marked by mixed mega cap earnings reports, Microsoft reported a rebound in cloud growth thanks to increasing demand for AI products.  

Although Wall Street’s view of tech giants never really weakened, entering into current earnings season, questions were raised regarding the company’s value and capacity for growth. These worries were partially confirmed by Alphabet Inc.’s lackluster cloud performance and Apple’s poor Chinese sales.

But now, it appears that sentiments are turning around. This is partially due to an optimistic outlook on fiscal policy, since the most recent jobs report hinted that rate hikes by the US central bank might be coming to an end. Treasury yields have fallen from historical highs as a result, which has eased a significant obstacle to tech prices.

Analysts bullish on Microsoft stock  

According to Alliance Global Partners Mark Martiak, treasury yields may have peaked, and this will improve sentiment—particularly in the tech sector.

Additionally, Oppenheimer shares the same sentiment and named purchasing Microsoft stock to be top of its list for the end of 2023. On the other hand, Truist Advisory Services reviewed their rating on the sector at the beginning of the week citing strong balance sheet, earnings and cash flow generation which will continue supporting outperformance. 

Based on the recent earnings, UBS Global Wealth Management, asserts that concerns over tech fundamentals cannot be justified currently since earnings growth is likely to sustain outperformance. UBS Global Wealth Management Americas investment officer Solita Marcelli said that the firm’s long-term positive outlook in the software and AI sector is supported by the latest earning results. 

Since Microsoft is regarded an AI leader, the growth boost it received from that has helped to drive up its estimates. According to Bloomberg data, full-year projections for its net earnings have increased by 2.4% within the last month, whereas revenue projections have increased by 2.8% within the same time.

By Ankur Banerjee

SINGAPORE (Reuters) – Asian stocks fell to their lowest in a week on Friday, while the dollar was firm as elevated Treasury yields weighed on sentiment after hawkish comments from U.S. Fed Chair Jerome Powell extinguished expectations of a peak in interest rates.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1% to a one-week low of 486.39, while Japan’s Nikkei was 0.50% lower.

U.S. Federal Reserve officials including Powell said on Thursday they are still not sure interest rates are high enough to finish the battle with inflation.

The Fed is “committed to … monetary policy that is sufficiently restrictive to bring inflation down to 2% over time,” Powell said at an International Monetary Fund event.

“We are not confident that we have achieved such a stance.”

Powell’s comments along with a weak auction of $24 billion in 30-year Treasuries pushed yields higher, casting a shadow on equities and providing support to the dollar. [US/]

“There is no point in corralling the market into expecting cuts until shortly before they look necessary,” said Rob Carnell, Asia-Pacific head of research at ING.

Investors have been looking for signs of U.S. interest rates peaking after the Fed held rates steady last week, a move that bolstered speculation that the rate hiking cycle was over, leading to a short-lived rally in risky assets.

Carnell said the Fed needs to keep rates and bond yields reasonably high to achieve the tighter financial conditions that will bring about lower inflation and enable the Fed to ultimately cut rates.

“That rhetoric has to continue, ‘we’re not definitely finished, there’s still a chance of more’ … (you) do that right up until the day before you cut,” he said.

Overnight, the three major U.S. stock indices closed lower, snapping the longest winning streaks for the Nasdaq and S&P 500 in two years as market optimism over looser monetary policy faded. [.N]

China stock eased 0.6%, while Hong Kong’s Hang Seng Index was 1.6% lower as worries over the world’s second-biggest economy resurfaced after data on Thursday showed consumer prices dipped back into contraction.

Tapas Strickland, head of market economics at NAB, said the data keeps the pressure on Beijing to continue with its incremental easing in monetary and fiscal policy.

The yield on 10-year Treasury notes eased 1 basis point to 4.620% in Asian hours, having risen 10.7 bps overnight. The yield on the 30-year Treasury bond fell 2.1 basis points to 4.746% after rising 12.1 bps overnight.

In the currency market, the dollar index held on to its overnight gains and was last at 105.87. The dollar stood near a one-year high at 151.38 yen and touched one-week highs against the Australian and New Zealand dollars. [FRX/]

U.S. crude eased 0.03% to $75.72 per barrel and Brent was at $80.08, up 0.09% on the day. The oil market has been reeling this week on demand concerns, with a fading war-risk premium triggering a sell-off. [O/R]

Spot gold was little changed at $1,959.74 per ounce and on track for their worst week in more than a month as elevated yield and stronger dollar weighed.

(Reporting by Ankur Banerjee in Singapore; Editing by Tom Hogue)

By Stephen Nellis, Max A. Cherney and Fanny Potkin

SAN FRANCISCO (Reuters) -Nvidia plans to release new artificial intelligence chips aimed at the Chinese market less than a month after U.S. officials tightened the rules on selling high-end AI chips to China.

The chip industry newsletter SemiAnalysis said that the Nvidia chips are called the HGX H20, L20 PCIe and L2 PCIe and that Nvidia could announce them on Nov. 16 at the earliest. Nvidia’s shares were up 3.3% in midday trading after the report.

The chips include most of Nvidia’s newest features for AI work, but have had some of their computing power measures cut back to comply with new U.S. rules, according to the newsletter’s analysis of the chip’s specifications.

Nvidia declined to comment when asked about the report. The White House and the Commerce Department did not immediately respond to requests for comment.

Last month, the U.S. AI chip giant, whose graphics processing units (GPUs) dominate the market for AI, said new export restrictions announced by Washington would block it from selling two of its modified advanced AI chips – the A800 and H800 – both of which were created for the Chinese market last year to comply with previous export rules.

The new rules put a cap on how much how much computing power a chip can pack into a small size. The rules also include what analysts call a “grey zone” in which the chips might still be allowed to ship to China but will require a license.

In a note to clients, Wells Fargo analyst Aaron Rakers wrote that all three of Nvidia’s reported chips appear to fall below the absolute caps on computing power, but one of them appears to be in the grey zone and will require a license.

“While we would consider an introduction of these three new GPUs as a positive, we would expect investors to question whether (Nvidia) is being a bit too aggressive in its efforts to circumvent U.S. restrictions and could ultimately just result in

further (U.S. government) moves going forward,” Rakers wrote, noting that Nvidia gets about a quarter of its data center chip revenue from China.

One of the Nvidia’s top-of-the-line gaming chips, the RTX 4090, is also affected by the new rules, Nvidia has said.

On Oct. 24, Nvidia said those curbs would take immediate effect, as U.S. regulators had sped up an original deadline.

Nvidia has commanded more than 90% share of China’s $7 billion AI chip market, and analysts have said the U.S. curbs are likely to create opportunities for domestic firms such as Huawei Technologies to make inroads.

Chinese internet giant Baidu placed a sizeable order for Huawei AI chips this year, sources have said. One said Baidu had done so before the U.S. curbs were announced as it was preparing for a future when it would no longer be able to purchase from Nvidia.

(Reporting by Brenda Goh in Shanghai, Max A. Cherney, Stephen Nellis in San Francisco, Fanny Potkin and Alexandra Alper; Editing by Edwina Gibbs and David Evans)

By Stephen Nellis

(Reuters) – Humane, a Silicon Valley startup with a star-studded list of co-founders and executives, on Thursday released a $699 device that aims to bring cutting-edge artificial intelligence to a lapel near you.

The Ai Pin, as the device is called, is designed to be worn on clothing and can be tapped to talk to a virtual assistant powered by technologies from ChatGPT-creator OpenAI and cloud computing power from Microsoft. It uses a laser projection system to display text and monochromatic images on a user’s hand.

Founded by ex-Apple veterans who worked on the iPhone, Humane is one of many companies in Silicon Valley angling to find the next wave of consumer devices. But the company has emphatically rejected the mixed-reality headsets in the works from companies such as Apple and Meta Platforms, with Humane co-founder and President Imran Chaudhri saying during a demonstration of the Ai Pin earlier this year that “the future is not on your face.”

Instead, Humane is offering a device with no traditional screen that relies almost entirely on artificial intelligence to interact with the user. The Pin’s virtual assistant aims to leapfrog others by composing messages in the user’s tone of voice and offers a “Catch Me Up” feature to summarize a messy email inbox. The Pin also includes a camera that can take pictures or use computer vision to scan objects like food, telling the user an estimate of its nutritional content.

“Ai Pin is the embodiment of our vision to integrate AI into the fabric of daily life, enhancing our capabilities without overshadowing our humanity,” Chaudhri said in a statement.

The company said the Ai Pin will be available in the United States from Nov. 16. Humane has raised $241 million from Microsoft, OpenAI CEO Sam Altman, and others.

(Reporting by Stephen Nellis in San Francisco, Editing by Rosalba O’Brien)

By Lananh Nguyen, Anirban Sen and Saeed Azhar

NEW YORK (Reuters) -Goldman Sachs expects dealmaking activity to stay subdued in the medium term as macroeconomic conditions weigh on private equity transactions, an executive said on Wednesday.

“For the medium term, the dealmaking environment will indeed be a little bit less robust,” Jim Esposito, co-head of Goldman’s global banking and markets division, said in an interview at the Reuters NEXT conference in New York.

The private equity industry over the past 18 months to two years has returned a lot less capital to their investors and have found it harder to monetize assets, he said.

“That flywheel of raising money, investing it, returning it, will be less efficient going forward,” Esposito said.

Mergers and acquisitions (M&A) activity globally showed few signs of improvement in the third quarter but a rebound in volumes in the United States – the world’s biggest investment banking market – gave dealmakers hope of a sustained recovery in the near term.

The total value of M&A fell slightly to $717.4 billion during the September quarter, according to data from Dealogic, from $738.1 billion last year during the same period.

Equity markets are feeling confident after the latest Federal Reserve meeting, he said. After the central bank kept rates unchanged, some companies decided to sell equity shares, he said.

The Fed earlier this month kept its overnight short-term interest rate target unchanged at between 5.25% and 5.5% and preserved the option to raise rates again as inflation is still well above its 2% target.

For initial public offerings, it will take a while for activity to pick up, with a potential recovery next year.

The trading environment for stocks and fixed income is far more interesting given the interest rate environment, inflation and escalating geopolitical tensions that are fueling volatility in markets.

“We’re sitting on what is one of the more interesting trading environments in my career,” he said.

Esposito addressed Goldman’s move to scale back its consumer ambitions.

Growing investor skepticism over the business — and $3 billion of losses — prompted CEO David Solomon to shift Goldman’s focus back to its traditional strengths of investment banking and trading.

The decision to move into consumer banking was made when the world was facing zero interest rates and no bank was earning its cost of capital, Esposito said.

“We realized that’s a hard business that we don’t necessarily have any differentiated or competitive advantage to be in,” he said.

“And so then there was a healthy debate about the sizing and scaling of our consumer ambition. And I think the firm under David’s leadership did something very, very brave.”

To view the live broadcast of the World Stage go to the Reuters NEXT news page: https://www.reuters.com/world/reuters-next/

(Reporting by Lananh Nguyen and Anirban Sen in New York and Saeed Azhar Editing by Chris Reese and Diane Craft)

(Reuters) – AMC Entertainment beat third-quarter revenue estimates on Wednesday, riding on the success of “Barbie” and “Oppenheimer” movies as volumes of theatrical releases also improved at the box office.

Popular and diverse movie titles are driving moviegoers to theaters in a post-pandemic environment, with pent-up demand and high ticket prices helping theater chain operators.

“AMC kept its market share elevated in the quarter, we think by virtue of its premium large format screen footprint,” Wedbush analyst Alicia Reese said.

Attendance in AMC theaters increased 38.4% to 73,576 in the third quarter.

Concert films by Taylor Swift and Beyonce are expected to benefit the company in the fourth quarter as several movies have been moved to the next year, CEO Adam Aron said on an earnings call.

“AMC is currently doing an excellent job of showing moviegoers and investors alike that it can fill a release slate with alternative content of various types if and when any release slate holes arise,” Wedbush analysts said last Friday.

The movie theater chain posted revenue of $1.41 billion for the quarter ended Sept. 30, compared with estimates of $1.26 billion, according to LSEG data.

“For both revenue and adjusted EBITDA, these were AMC’s most successful third-quarter results in our company’s entire 103-year history,” Aron added.

AMC’s profit per share stood at 8 cents, compared with estimates of a loss of 19 cents per share.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Krishna Chandra Eluri and Shounak Dasgupta)

By Akash Sriram

(Reuters) -Lyft reported third-quarter revenue and profit surpassing estimates on Wednesday, but gross bookings growth was lower than larger rival Uber’s ride-hailing business.

Gross bookings, which is a metric Lyft started disclosing in the third quarter measuring total transaction value on its platform, grew 15% from a year earlier, compared with a 31% jump in Uber’s mobility business.

Shares of Lyft fell nearly 4% in extended trading.

While analysts and investors believe Lyft will maintain its position as the second-largest ride-hailing platform, they said it is more susceptible to economic uncertainty.

“Softening macro conditions will likely impact Lyft more than its larger peer, Uber,” said Angelo Zino, senior equity analyst at CFRA Research.

Lyft commands 29% of the ride-hailing market as of September, slightly higher than the 27% market share it had at the start of the year, according to YipitData, after it said it will price its rides competitively rival Uber.

“While operating from a more efficient cost structure is certainly part of our formula, it is by no means the only part of the margin expansion equation,” Chief Financial Officer Erin Brewer told Reuters.

Brewer added that an improved mix of airport rides, scheduled rides and priority pickups also helped margin expansion.

Lyft forecast current-quarter adjusted core profit, a key profitability metric closely watched by investors, of $50 million-$60 million, higher than expectations of $48.8 million, according to LSEG data.

Adjusted profit in the third quarter stood at 24 cents per share, compared with estimates of 13 cents.

Lower prices helped Lyft serve 22.4 million active riders, which jumped 10% compared with a year earlier.

Lyft said it expects fourth-quarter revenue to grow in mid-single-digits sequentially, compared with market expectation of 4.6% growth, according to Reuters calculations.

Revenue grew 10% to $1.16 billion in the quarter ended Sept. 30, surpassing analysts’ average estimate of $1.14 billion.

Lyft’s adjusted core earnings of $92 million in the third quarter topped expectations of $82.6 million.

(Reporting by Akash Sriram in Bengaluru; Editing by Krishna Chandra Eluri)

(Reuters) -AMC Entertainment Holdings beat third-quarter revenue estimates on Wednesday, riding on the success of “Barbie” and “Oppenheimer” movies as volumes of theatrical releases also improved at the box office.

Popular and diverse movie titles are driving moviegoers to theaters in a post-pandemic environment ruled by pent-up demand and high prices of tickets helping theater chain operators.

Attendance in AMC theaters increased 38.4% to 73,576.

“AMC is currently doing an excellent job of showing moviegoers and investors alike that it can fill a release slate with alternative content of various types if and when any release slate holes arise,” Wedbush analysts said last Friday.

The movie theater chain posted revenue of $1.41 billion for the quarter ended Sept. 30, compared with market estimates of $1.26 billion, according to LSEG data.

“For both revenue and adjusted EBITDA, these were AMC’s most successful third-quarter results in our company’s entire 103-year history,” CEO Adam Aron said.

AMC’s profit per share stood at 8 cents compared with target estimates of loss of 19 cents per share.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Krishna Chandra Eluri)

(Reuters) -AMC Entertainment Holdings beat third-quarter revenue estimates on Wednesday, riding on the success of “Barbie” and “Oppenheimer” movies as volumes of theatrical releases also improved at the box office.

Popular and diverse movie titles are driving moviegoers to theaters in a post-pandemic environment ruled by pent-up demand and high prices of tickets helping theater chain operators.

Attendance in AMC theaters increased 38.4% to 73,576.

The movie theater chain posted revenue of $1.41 billion for the quarter ended Sept. 30, compared with market estimates of $1.26 billion, according to LSEG data.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Krishna Chandra Eluri)

By Chuck Mikolajczak

(Reuters) – The S&P 500 and Nasdaq eked out small gains on Wednesday to extend their recent winning streaks as investors weighed Federal Reserve officials’ recent comments for signals on the path of interest rates and focused on the direction of Treasury yields.

U.S. Treasury yields have retreated sharply since the benchmark 10-year Treasury note topped 5% in late October, as comments from Fed officials and softer labor data led to growing expectations the central bank had reached the end of its rate-hike cycle.

That drop has helped fuel a stock rally that has given the S&P 500 and the Nasdaq their longest streak of gains in two years through Wednesday’s close at eight and nine sessions, respectively.

Markets are pricing in about a 50% chance of a rate cut of at least 25 basis points as soon as May, according to the CME Group’s FedWatch Tool, up from about 41% a week earlier.

Still, comments from several central bank officials over the past few days left the door open for additional hikes, causing some uncertainty among investors.

“Everyone kind of knows we’re either going to get one more hike or they’re done and they’re probably done,” said Jason Ware, chief investment officer at Albion Financial Group.

“If we get a recession stocks have a different valuation, earnings look different. If we don’t then we’re probably in the context of a new early stage bull market here,” he said.

“That’s the question that investors are going to be asking themselves while watching yields – the information we get between now and the end of the year on yields and economic data as it relates to recession is going to drive the tape.”

The Dow Jones Industrial Average fell 40.33 points, or 0.12%, to 34,112.27; the S&P 500 gained 4.40 points, or 0.10 %, at 4,382.78; and the Nasdaq Composite added 10.56 points, or 0.08 %, at 13,650.41.

The Dow’s decline snapped a seven-session winning streak.

Meanwhile, Fed Chair Jerome Powell did not comment on monetary policy in opening remarks at the U.S central bank statistics conference on Wednesday. He is scheduled to speak at another conference on Thursday.

Longer-dated yields fell and the 10-year Treasury yield was down on the day after a $40 billion auction analysts viewed as acceptable given the increased size.

Eli Lilly shares climbed 3.2% after the U.S. Food and Drug Administration approved the drugmaker’s weight loss treatment.

In earnings, Warner Bros Discovery plunged 19% after the media and entertainment conglomerate said Hollywood strikes and a weak advertising market could hurt 2024 earnings, weighing on peer Paramount Global.

Take-Two Interactive Software jumped 5.2% after the company said it would release a trailer early next month for the latest installment in its best-selling “Grand Theft Auto” videogame franchise.

Electric vehicle maker Lucid Group stumbled 8.1% after trimming its production forecast.

Declining issues outnumbered advancers by a 1.3-to-1 ratio on the NYSE while on the Nasdaq declining issues outnumbered advancers by a 1.7-to-1 ratio on the Nasdaq.

The S&P 500 posted 17 new 52-week highs and eight new lows while the Nasdaq recorded 53 new highs and 206 new lows.

Volume on U.S. exchanges was 10.27 billion shares, compared with the 10.95 billion average for the full session over the last 20 trading days.

(Reporting by Chuck Mikolajczak; Editing by Richard Chang)