Fed hinting at rate cuts could benefit AI leaders Nvidia, AMD, and Microsoft

From Nasdaq: 2024-08-27 08:19:27

The Federal Reserve’s decision to raise interest rates in 2022 exacerbated the 2022 bear market, but rates have remained stable around 5.25-5.5%. Fed Chair Powell hinted at upcoming rate cuts due to cooling inflation and softening labor market trends, which could benefit growth stocks like AI companies.

Nvidia (NASDAQ: NVDA) serves as a leader in generative AI, with its stock benefiting from increased rate cut expectations, as seen with a 4.6% gain following Powell’s speech. While lower rates may not impact Nvidia directly, it could stimulate more spending and investment in AI, boosting the company’s market presence.

Advanced Micro Devices (NASDAQ: AMD) has also entered the AI race with recent acquisitions, like ZT Systems and Silo AI. Lower interest rates would make it cheaper for AMD to borrow for future acquisitions and investments, potentially increasing its competitive position against Nvidia in the AI sector.

Microsoft (NASDAQ: MSFT) may not be a chipmaker like its competitors, but lower interest rates could drive increased spending from enterprise customers and end consumers. Cheaper borrowing costs could also benefit Microsoft’s partner, OpenAI, which could use the funding to further develop its technology.

Considering the potential impact of lower interest rates on AI stocks like Nvidia, Advanced Micro Devices, and Microsoft, investors may see increased value in these companies as spending and investment in AI technology continues to grow. As the Fed hints at rate cuts, these companies could see boosts in their stock prices and market positions.



Read more at Nasdaq: Prediction: Here’s How the Fed’s Next Announcement Will Change Things for 3 Major Artificial Intelligence (AI) Players