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Tesla, Nvidia Lead Nasdaq Surge After Fed Rate Cut

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The Nasdaq experienced one of its strongest rallies of 2024 on Thursday, surging 2.5% as investors flocked to tech stocks following the Federal Reserve’s first interest rate cut since 2020. Tesla and Nvidia led the charge, with Tesla shares climbing 7.4% and Nvidia jumping 4%, boosting the tech-heavy index to its fourth-largest gain this year. The biggest surge occurred on February 22, when the Nasdaq rose by 3%.

Tech stocks tend to benefit from lower interest rates due to reduced borrowing costs and more favorable investment conditions. The Fed’s half-point rate cut, along with indications of further reductions by the year’s end, created a bullish environment for tech stocks. The central bank’s “dot plot” suggests another 50 basis points of cuts before 2025, potentially reducing rates by 2 percentage points overall.

Thursday’s rally lifted the Nasdaq to 18,013.98, its highest point since mid-July and only 3.5% below the 2024 peak of 18,647.45, reached on July 10. Nvidia, a key player in the artificial intelligence (AI) revolution, closed at $117.87, up 4%. The company’s processors are fueling the rise of generative AI and tools like OpenAI’s ChatGPT. Nvidia’s stock is up around 138% this year, although still 13% below its all-time high from June.

Nvidia’s impressive growth is largely driven by major customers such as Microsoft, Meta, Alphabet, Amazon, Oracle, and OpenAI, which use its technology to develop large language models and manage substantial AI workloads. However, lower interest rates are expected to further bolster Nvidia’s stock performance.

Other chipmakers saw gains as well, with Advanced Micro Devices (AMD) up 5.7% and Broadcom rising 3.9%. While AMD is still trailing Nvidia in the AI race, its CEO, Lisa Su, emphasized that AI is a long-term game. Speaking with CNBC’s Jim Cramer, Su pointed out that the widespread adoption of AI is still in its early stages, and its impact will be seen in fields like education and healthcare over time. “We all use it, and we’re all learning,” she said.

Tesla was the standout among the tech megacap companies, posting a 7.4% gain on Thursday. Despite this jump, the electric vehicle maker has struggled in 2024, with its stock down nearly 2% for the year. However, Tesla is up 72% from its lowest point in April. Other tech giants, including Apple and Meta, also saw strong performances, both closing with nearly 4% gains.

 

Reports: Apple and Nvidia in Negotiations to Participate in OpenAI’s Funding Round

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The Wall Street Journal Reports Apple’s Interest, While Bloomberg News Reveals Nvidia’s Potential Participation Devamını Oku

OpenAI’s $150 Billion Valuation Tied to Major Corporate Restructuring

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OpenAI is on the verge of a significant transformation as it seeks a $150 billion valuation in its latest financing round. The funding, expected to be around $6.5 billion, may hinge on substantial changes to the company’s corporate structure, including the potential removal of profit caps for investors. This restructuring reflects OpenAI’s evolution from a research-focused non-profit to a high-value enterprise aiming for breakthroughs in artificial general intelligence (AGI).

Funding and Investor Involvement

The new financing round is likely to involve convertible notes and has generated considerable interest from investors. Current backers, including Thrive Capital, Khosla Ventures, and Microsoft, are anticipated to participate, while new investors like Nvidia, Apple, and possibly Sequoia Capital are also expected to contribute. The deal could be finalized within weeks due to OpenAI’s rapid revenue growth.

Structural Changes and Profit Cap Removal

To secure the desired valuation, OpenAI is considering removing the profit cap that currently limits returns for investors in its for-profit subsidiary. This cap, established to balance commercial interests with safety and sustainability in AGI development, would need approval from OpenAI’s non-profit board, which includes CEO Sam Altman, entrepreneur Bret Taylor, and seven other members.

The potential shift to a for-profit benefit corporation, similar to structures used by rivals like Anthropic and xAI, has been discussed but remains uncertain. Such a move could enhance returns for early investors but might also raise concerns about OpenAI’s adherence to its original non-profit mission.

Historical Context and Governance

Founded in 2015 as a non-profit with a mission to advance AI for humanity’s benefit, OpenAI has made a significant shift towards commercialization. It now offers subscription-based services like ChatGPT, which has over 200 million users. The company previously used a capped return model, limiting investor returns to 100 times their investment, with excess profits directed to the non-profit arm.

This model allowed OpenAI to raise over $10 billion, primarily from Microsoft. The company was valued at $80 billion in February following a tender offer deal led by Thrive Capital. The removal of the profit cap and other structural changes are part of OpenAI’s broader strategy to continue its aggressive pursuit of AGI while addressing investor demands and market pressures.

Future Implications

The proposed restructuring could significantly impact OpenAI’s future, potentially influencing its governance, mission alignment, and investor relationships. As the company continues to push the boundaries of AI technology, its ability to balance commercial success with its foundational goals will be closely watched by stakeholders and the broader tech community.