It was a strong week for US stocks as the US Federal Reserve hit pause on rate hikes and inflation showed further signs of easing.
The Nasdaq index was the stand-out performer, partly because it is more sensitive to movements in interest rates but also as some stocks benefited from excitement over the AI (artificial intelligence) opportunity.
Cruise stocks maintained the momentum they have demonstrated all year as passenger numbers returned to pre-pandemic levels and investment banks JP Morgan and Bank of America produced positive research on the sector.
Cosmetics company Estee Lauder (EL:NYSE) was in demand as it trailed the results of fresh research into skin health and anti-ageing to be unveiled in July.
Health insurance stocks struggled after comments from UnitedHealth (UNHNYSE) boss Tim Noel suggesting older Americans are pursuing more elective surgeries – thereby hinting at higher costs for the space.
Beyond the top tier of stocks, shares in Virgin Galactic (SPCE:NYSE) surged more than 40% as it announced plans for its first commercial space flight later this month.
INTEL
Chip stocks were strongly bid this week with the Philadelphia SOX index gaining 5% led by Intel (INTC:NADSAQ) with a 13% gain over five days.
Excitement has been building over the forthcoming IPO (initial public offering) of ARM, the UK chip designer owned by Japan’s Softbank (9984:TYO).
The Cambridge-based business had been lined up for sale to Nvidia (NVDA:NASDAQ), but the deal fell through in early 2022 due to competition concerns from the regulator and some of ARM’s customers including Apple (AAPL:NASDAQ).
Intel is seen as a front-runner to support the ARM float with a big investment, which is why its shares have led the field. Investors betting on the company benefiting from any outperformance by ARM after it joins the market and a stronger relationship between the two companies.
ORACLE
Shares in Oracle (ORCL:NASDAQ) hit new all-time highs this week, taking 2023 price gains close to 50% the company bested Wall Street sales and profit forecasts for its fiscal fourth quarter.
The database and software company delivered a 16.6% increase in Q4 sales to $13.8 billion, driving full year sales 18% higher to a record $50 billion.
Adjusted EPS (earnings per share) came in at $1.60, an 8% increase on the prior year which beat analysts’ expectations of $1.58 according to Refinitiv data.
CEO Safra Catz said: ‘Annual revenue growth was led by our cloud applications and infrastructure businesses which grew at a combined rate of 50% in constant currency.
Looking forward Oracle said it anticipated sales to grow at 8% to 10% with double digit percentage gains in cloud on increasing demand for AI.
‘We are seeing unprecedented demand for our cloud services and especially our AI services’ added Catz.
Oracle is expected to be an early beneficiary of AI adoption after it signed a deal with chipmaker Nvidia (NVDA:NASDAQ) in March.
ADOBE
Shares in Adobe posted decent gains after better-than-expected quarterly earnings from the multimedia and software firm.
For the three-month period to 2 June, the company achieved adjusted earnings per share of $3.91, above Adobe’s previously forecast range of $3.75 to $3.80 per share.
Revenue of $4.82 billion, a record high for the second quarter, also came in ahead of Adobe’s existing guidance of $4.75 billion to $4.78 billion. This added up to a 10% increase year-on-year.
The company also lifted its full-year forecasts to between $19.25 billion and $19.35 billion in revenue and adjusted earnings per share between $15.65 and $15.75.
Adobe hopes to be at the forefront of generative AI, although some observers see risks to the business if AI replaces roles currently carried out by people, resuling in a reduced user base for the company’s services.
