By Amruta Khandekar and Bansari Mayur Kamdar
(Reuters) - The benchmark S&P 500 index briefly hit a fresh record on Thursday after Nvidia's stellar results and forecast spurred the artificial intelligence-led rally this year.
Nvidia's shares surged 12.9% after the chip designer forecast a roughly three-fold surge in first-quarter revenue on strong demand for its AI chips.
The company, which also beat expectations for fourth-quarter revenue, could add more than $200 billion in market capitalization, if gains hold.
At 09:42 a.m. ET, the benchmark S&P 500 was up 1.31% at 5,047.07, after hitting intraday record high of 5051.37 earlier in the session.
Eight of the 11 major S&P 500 sectors rose in early trading, with technology stocks leading gains with a 3.8% jump.
The Dow Jones Industrial Average was up 226.78 points, or 0.59%, at 38,839.0, and the tech-heavy Nasdaq Composite was up 332.50 points, or 2.13%, at 15,913.37.
Shares of other companies, seen as beneficiaries of the AI boost, also got a shot in the arm. Nvidia's rival Advanced Micro Devices, server component supplier Super Micro Computer and Arm Holdings jumped between 6.9% and 16.8%.
The Philadelphia Semiconductor index climbed 4%.
Big Tech and growth stocks such as Alphabet, Microsoft and Meta Platforms rose between 0.8% and 2.4%.
Nvidia's earnings were a major test for the AI-fueled rally on Wall Street that pushed the S&P 500 beyond the 5,000 point mark earlier this month. Some analysts had cautioned that disappointing results could spark a steep selloff among technology stocks.
"Investors are embracing Nvidia especially, but continue to embrace AI. In the short run, momentum is definitely behind a lot of the AI stocks," said Paul Nolte, senior wealth advisor and market strategist for Murphy & Sylvest, but warned of risks in the long term.
"The assumptions are that earnings are going to grow at this pace for the next four-five years and that for a company that size in market value, is going to be a difficult hurdle," Nolte added, referring to Nvidia.
Meanwhile, investors stuck to bets the U.S. Federal Reserve will begin cutting interest rates in June after minutes from the central bank's latest meeting showed a majority of policymakers were concerned about the risks of easing policy too soon.
Data showed initial jobless claims fell to 201,000 in the week ended Feb. 17 from 213,000 in the previous week, signaling the labor market remained tight. Economists polled by Reuters had estimated 218,000 jobless claims.
Surveys on business activity in February from S&P Global will also be in focus after markets open.
Of the 395 companies in the benchmark S&P 500 index that have reported earnings for October-December quarter as of Friday, 80% beat analyst expectations, according to LSEG data.
Moderna jumped 5.4% on a surprise fourth-quarter profit, helped by cost cutting and some deferred payments.
Rivian and Lucid fell 22.7% and 9.5%, respectively, after the electric vehicle startups forecast 2024 production well below analyst estimates on slowdown in demand.
Advancing issues outnumbered decliners by a 1.94-to-1 ratio on the NYSE and by a 1.58-to-1 ratio on the Nasdaq.
The S&P index recorded 42 new 52-week highs and no new lows, while the Nasdaq recorded 43 new highs and 32 new lows.
(Reporting by Amruta Khandekar and Bansari Mayur Kamdar in Bengaluru; Editing by Shounak Dasgupta and Shinjini Ganguli)
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