Microsoft and Nvidia hit all-time highs

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Microsoft CEO Satya Nadella participates in an interview at the company’s headquarters in Redmond, Washington, on March 15, 2023.

How Kasinger | Bloomberg | Getty Images

This report is from today’s CNBC Daily Open, our new international markets newsletter. CNBC Daily Open gives investors access to everything they need to know, wherever they are. Like what you see? You can subscribe here.

What you need to know today

Altman joins Microsoft
Sam Altman, who was ousted as CEO of OpenAI on Friday, joining Microsoft to lead a new artificial intelligence team. Greg Brockman, former president of OpenAI – and probably many other employees at the AI ​​startup – will also join Microsoft. Investors supported the move, pushing Microsoft shares to record highs. Microsoft CEO Satya Nadella, meanwhile, said OpenAI’s governance structure needs to change.

Tech construction
US markets traded higher on Monday, driven by excitement over technology stocks. Microsoft and Nvidia hit record highs, while US Treasury yields eased on the back of a strong auction. Asia-Pacific markets rose mostly on Tuesday. Hong Kong’s Hang Seng Index rose about 1%. Chinese property shares rose after a report said Chinese regulators were drafting a list of developers eligible for funding.

New high for Nvidia
Nvidia shares rose 2.25% to close at an all-time high of $504.09, ahead of the chipmaker’s earnings report today. That gives Nvidia market capitalization of $1.2 trillion, more than Meta or Tesla. Investors have good reason to be happy: revenue for the company’s fourth fiscal quarter is expected to grow by 200%, according to LSEG estimates.

A stronger foundation is needed
Despite stimulus measures introduced by the Chinese government in recent months, the Chinese real estate market “needs more support,” according to analysts. “Credit risk associated with developers” remains the most important issue, according to the Macquarie report. But some developers are coming out of their pool. The real estate company Sunac said on Tuesday that it meets the terms of a restructuring, sending its shares up by around 20%.

[PRO] Money is not king
High interest rates and Treasury yields have fueled an increase in cash deposits and money market funds. But that’s “a missed opportunity,” said Andy Budden, director of equity investment at financial services firm Capital Group. Instead, investors should have “a little confidence” – especially since now is a “good time” to play the market,

The bottom line

All the turmoil at OpenAI over the weekend turned out to be good – for Sam Altman and Microsoft, At least. Altman has a role at Microsoft at the head of the new artificial intelligence laboratory. The post sent Microsoft shares to a new high.

Wedbush Securities tech analyst Dan Ives, in a note published Monday, had strong words regarding the drama over the weekend. The OpenAI table was “at the kids’ poker table and they thought they won until Nadella and Microsoft took it all over in a World Series of Poker for the ages with the Valley and Wall Street watching with white worms Sunday night/early Monday morning,” Ives wrote.

“We see Microsoft now even in a STRONGER position from an AI perspective with Altman and Brockman at MSFT running AI,” he said.

To be sure, these are early days in the OpenAI-Sam Altman saga. The situation remains volatile, but for now, the scales seem to have been tipped firmly to one side.

Meanwhile, at another corner of the technology industry, expectations are over Nvidia at an earnings report later today pushed the chipmaker’s shares up to record highs. If history repeats itself, Nvidia might even break the out-of-this-world prediction. But with so much good news already baked into the company’s share price, it’s hard to see the stock rising any more in the near term.

Despite this, markets had a good start to the week. The S&P 500 changed so far +0.74% compared to yesterday Dow Jones industrial average 0.58% is added and the Nasdaq Composite changed so far -1.13% compared to yesterday. The S&P and the Nasdaq enjoyed their fifth straight day of gains.

Investors will also be keeping an eye on the minutes of the latest Federal Reserve meeting due later today. Since the Fed prefers to telegraph its intentions so strongly, the likelihood of anything unexpected in the minutes is slim. That’s a good thing – we’ve had plenty of fun these past few days.

— CNBC’s Sophie Kiderlin contributed to this report.

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