Micron's AI Boost Ignites Wall Street's Optimism

U.S. stock index futures climbed on Thursday, fueled by Micron's upbeat forecast that revived the euphoria around artificial intelligence (AI) on Wall Street. Investors also eagerly awaited economic data and remarks from Federal Reserve Chair Jerome Powell.

Unlocking the AI-Driven Surge in Semiconductor Stocks

Micron's AI-Powered Forecast Sparks Semiconductor Surge

Micron Technology (NASDAQ:MU) jumped 14.7% in premarket trading after the memory chip maker forecast higher-than-expected first-quarter revenue, underscoring the robust demand for memory chips used in AI computing. This optimism quickly spread to other chip stocks, with Nvidia (NASDAQ:NVDA) rising 1.8%, Advanced Micro Devices (NASDAQ:AMD) advancing 2.2%, and Broadcom (NASDAQ:AVGO) adding 1.7%. Semiconductor equipment companies, such as Applied Materials (NASDAQ:AMAT) and KLA Corp, also experienced significant gains of 5.4% and 4.5%, respectively. The strong revenue guidance from Micron has reignited the AI trade, reminding the market of the continued relevance and potential of this transformative technology.

AI Optimism Lifts Growth Stocks Across the Board

The AI-driven optimism extended beyond the semiconductor sector, with Meta (NASDAQ:META) leading the charge among other growth names, rising 1.9% a day after unveiling an entry-level version of its Quest line of mixed-reality headsets. Alphabet (NASDAQ:GOOGL) added 1.3%, Tesla (NASDAQ:TSLA) climbed 1.4%, and Microsoft (NASDAQ:MSFT) was up 0.8%. Investors are eagerly anticipating the potential boost to earnings that these companies could see from the integration of AI technology into their products and services.

Futures Soar as Investors Embrace the AI Revolution

At 7:02 a.m. ET, Dow E-minis were up 209 points, or 0.49%, S&P 500 E-minis were up 45.75 points, or 0.79%, and Nasdaq 100 E-minis were up 287.75 points, or 1.43%. Futures tracking the Russell 2000 small caps index added 1%. The benchmark S&P 500 and blue-chip Dow have hit multiple record highs since the start of this year, while the tech-laden Nasdaq is about 3% away from its own milestone, as investors eagerly embrace the potential of AI-driven companies.

Expectations of Lower Interest Rates Fuel the AI-Driven Rally

Expectations of lower interest rates this year have further strengthened the rally, with traders expecting the Federal Reserve to deliver another outsized cut in November with a 60.8% chance, up from 38.8% a week ago, as per the CME Group's (NASDAQ:CME) FedWatch Tool. This optimism has also spread to U.S.-listed Chinese firms, such as Li Auto (NASDAQ:LI), which advanced 8%, PDD Holdings, which rose 8.2%, and Alibaba (NYSE:BABA), which added 6%.

Copper and Lithium Miners Benefit from China's Fiscal Stimulus

The optimism surrounding AI and the broader market rally has also had a positive impact on other sectors, such as copper and lithium miners. Freeport-McMoRan (NYSE:FCX) rose 4.9%, while Albemarle (NYSE:ALB) climbed 4.3% and Arcadium added 2.7% after a report said China plans to issue special sovereign bonds worth about 2 trillion yuan as part of a fresh fiscal stimulus.

Accenture's Upbeat Forecast Adds to the Positive Sentiment

The positive sentiment was further bolstered by Accenture's (NYSE:ACN) strong performance, with the IT services provider gaining 6.8% after forecasting annual revenue above estimates. This news, coupled with the AI-driven optimism and the expectations of lower interest rates, has created a favorable environment for investors, who are eagerly anticipating the potential of the AI revolution to drive the next phase of growth in the market.