Investors are buying into AI and Musk either way: Morning Brief

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Here's a takeaway from today's Morning Brief that you can take away. Sign up To receive in your inbox every morning with:

The magnitude of the stock market rally has yet to be reached as investors continue to pile (just) into everything AI touches.

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

Its shares also rose when the Dell ( DELL ) CEO said his company would partner with AI kingpin Nvidia ( NVDA ) to build an “AI factory” for Musk's xAI.

And while the jumps in both names were short-lived, their performance this year and Musk's response to a one-word post are reminders that what he says matters to many people and that anyone dealing with AI The thing will push the markets.

So far this year, SMCI is up over 200%. Dell, which for some harkens back to the world of PC 1.0, has seen its stock nearly double.

It doesn't take a convoluted plan or one-off approach to capitalize on Wall Street's excitement around AI technology. The real driver of the seemingly unstoppable run to 2024 is the earning potential of the Magnificent Seven, which includes Nvidia, Tesla, and the platform giants.

Citi analysts, who earlier this week raised their S&P 500 year-end target to 5,600, observed that more than two-thirds of the stock market's gains so far have come from the Magnificent Seven.

And adding Alvin to the mix certainly doesn't hurt.

Musk has a clear edge in super-micronews, and part of the multi-CEO dynamic is that his businesses straddle different industries and are themselves interconnected. But because Tesla is Musk's only public company, most investors can only indirectly participate in its other ventures. If you can't buy into xAI, why not get a piece of its suppliers?

Elon Musk attends the session 'Exploring the New Frontiers of Innovation: Mark Read in Conversation with Elon Musk', Cannes Lions International Festival of Creativity 2024 – Day 3 on June 19, 2024 in Cannes, France. (Mark Piasky/Getty Images) (Mark Piasky via Getty Images)

A similar dynamic is playing out in the world of AI.

The AI ​​rally has moved beyond hardware manufacturers as well. Investors trying to create a makeshift basket of related tech holdings are doing the same with Nvidia. Because it's not just the big tech platforms that are developing apps and productivity software that are making AI exciting. There's a whole ecosystem out there.

Training AI systems and powering the computer systems that run them requires a lot of energy. Utility companies 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, which will include building and operating data centers. As a result, the demand for electricity from US data centers is expected to more than double by 2030, due to AI, according to estimates by consulting firm McKinsey.

It is good to arrive early. But the AI ​​frenzy is proving that getting in at all is more than enough.

A short picture of the morning

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

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