U.S. technology stocks resumed a strong rally after a stretch of weakness tied to concerns over AI safety. Meta shares surged more than 11% after the company's new AI agent climbed to No. 1 on Apple's App Store, and the so-called Magnificent Seven stocks all advanced.
Meta rose 11.4% on the 21st, its largest one-day gain in about a year, according to The Wall Street Journal. Its market value increased by $192 billion in a single session, and an exchange-traded fund tracking the Magnificent Seven set a record high for the first time since May.
Driving the gains was Muse, the AI assistant Meta launched on the 8th. Muse logged 730,000 downloads over five days, according to market research firm Sensor Tower, outpacing ChatGPT, Claude and Grok, and on the 18th it overtook ChatGPT to become the No. 1 free app on Apple's U.S. App Store. That fueled expectations that Meta's heavy AI spending could translate into a new revenue stream. Muse is free by default, but Meta also introduced paid subscriptions at $20 and $100 a month, raising hopes for a source of revenue beyond advertising.
Wall Street had questioned how Meta would convert its massive AI outlays into profit. Youssef Squali, an analyst at Truist, called Muse the most important consumer product Meta has released in years and described it as the clearest attempt yet by the company to build a revenue base outside advertising.
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As optimism about AI spread again, other technology and semiconductor stocks rose in step. All six of the remaining Magnificent Seven names gained alongside Meta, while Intel jumped 12% and AMD rose 10%. AMD's market value topped $1 trillion for the first time, making it the 14th U.S. company to reach that mark. Meta is also AMD's second-largest customer, accounting for 5.5% of its revenue.
Analysts said Intel and AMD benefited most from expectations that AI agents, which carry out multiple tasks in sequence on their own, will generate far more inference computing than chatbots and lift demand for server central processing units. Matthew Bryson, an analyst at Wedbush, said Intel and AMD are effectively the only two companies able to handle computing on that scale.
The technology rally pushed the Nasdaq Composite up 2.3% to a record close, its third straight session of gains. The Standard & Poor's 500 rose 1.5% and the Dow Jones Industrial Average added 0.7%.
With appetite for risk assets broadening, bitcoin climbed to around $86,000 for the first time since January. Shares of Strategy, a large holder of bitcoin, jumped 9.5%.
A pullback in international oil prices, which had risen sharply in recent weeks, also helped equities. Brent crude futures fell 3.4% to $100.34 a barrel, a fourth consecutive session of declines.
Interest rates remain a burden, however. The yield on the 10-year U.S. Treasury note stood at 4.962%, and markets are pricing in a high probability that the Federal Reserve will raise its policy rate at least once more this year.
Brad Conger, chief investment officer at Hirtle Callaghan, said high inflation and the prospect of further rate increases may not be enough to break the AI enthusiasm in the near term, adding that there is little choice but to conclude that the stock market is shrugging it off.
