The S&P 500 and Dow Jones Industrial Average both surged to close at record highs on Thursday, fueled by a wave of investor enthusiasm for growth and technology stocks following Nvidia’s stellar earnings report and bullish outlook on artificial intelligence chip demand.

Nvidia’s shares (NVDA.O) skyrocketed after the chip designer projected a nearly three-fold increase in first-quarter revenue, citing robust demand for its AI chips.

The company’s performance surpassed expectations for fourth-quarter revenue, underscoring its position as a leader in the AI market.

The success of Nvidia’s earnings served as a litmus test for the AI-driven rally on Wall Street, particularly after the S&P 500 breached the 5,000-point milestone earlier this month.

Analysts had warned of a potential sell-off in technology stocks if Nvidia’s results fell short. However, the market responded with a surge, propelling both the S&P 500 and Dow Jones Industrial Average to record highs.

Significant gains

Unofficial closing data revealed that the Dow Jones Industrial Average climbed 456.54 points, or 1.18%, to 39,068.78, while the S&P 500 gained 105.14 points, or 2.11%, to 5,086.94.

The Nasdaq Composite also saw significant gains, adding 460.75 points, or 2.96%, to 16,041.62.

Jack Janasiewicz, lead portfolio strategist at Natixis Investment Managers Solutions, humorously remarked, “As Nvidia goes, so goes the world,” highlighting the company’s influence on market sentiment. Janasiewicz emphasized that Nvidia’s strong earnings dispelled doubts about the sustainability of the AI trade, suggesting further potential for growth.

Nvidia’s market capitalisation surge on Thursday surpassed Meta Platform’s historic $196 billion gain earlier in the month, solidifying its position as a market leader in AI technology.

Maintain its position

Market analysts predict that the S&P 500 will maintain its position above the 5,000 mark throughout the year, according to a Reuters poll.

Most sectors within the S&P 500 experienced gains, with technology stocks leading the charge.

The S&P 500 growth index recorded its largest daily percentage gain since November 2022.

In addition to Nvidia, other companies poised to benefit from the AI boom saw notable increases in their stock prices.

Advanced Micro Devices (AMD.O), Super Micro Computer (SMCI.O), and Arm Holdings all experienced significant jumps.