Key facts
- Marvell Technology shares surged over 30%.
- Nvidia CEO Jensen Huang predicted Marvell could reach a $1 trillion valuation.
- Nvidia invested $2 billion in Marvell for collaboration.
- Marvell Technology and Flex Ltd. will join the S&P 500 index.
- Pool Corp. and Campbell's will be replaced in the S&P 500 by Marvell and Flex.
- S&P 500 inclusion changes are effective June 22.
- The Dow Jones Industrial Average closed at a record high.
- Broadcom shares fell 15% after disappointing earnings.
- Initial jobless claims unexpectedly rose.
- Seagate Technology raised its full-year earnings forecast.
- The market achieved its strongest start to a midterm-year second quarter since 1950.
- Point72 hedge fund returned 10.5% year-to-date as of May.
Marvell Technology experienced a significant stock surge, climbing over 30% after Nvidia CEO Jensen Huang projected a potential $1 trillion valuation for the company, emphasizing its crucial role in AI infrastructure. Nvidia has invested $2 billion in Marvell to foster collaboration. This substantial increase in Marvell's market capitalization has made it the largest company currently eligible for inclusion in the S&P 500 index. Consequently, Marvell Technology, along with Flex Ltd., is slated to join the S&P 500, replacing Pool Corp. and Campbell's. These changes are scheduled to take effect on June 22. Marvell shares saw an additional 6% rise in after-hours trading following the announcement of its impending S&P 500 inclusion.
In broader market movements, the Dow Jones Industrial Average reached an all-time high on Thursday, supported by gains in UnitedHealth and financial stocks. The S&P 500 also saw an increase. However, the Nasdaq Composite ended lower as chip stocks experienced a sell-off. This decline in the tech sector was partly attributed to Broadcom's disappointing earnings report, which led to a 15% drop in its shares. Initial jobless claims unexpectedly rose, and corporate layoffs increased, with a notable portion linked to AI developments. Seagate Technology's stock rallied significantly after reporting strong second-quarter earnings that exceeded analyst expectations and raising its full-year earnings forecast. IBM and Oracle were also identified as key stock movers on Wednesday, influencing overall market capitalization, though specific performance details were not immediately available.
The market has demonstrated its strongest start to a midterm-year second quarter since 1950, a period typically considered weaker within the presidential cycle. This performance has occurred despite broader economic indicators such as rising initial jobless claims and increased corporate layoffs, a significant portion of which are attributed to AI. Hedge funds, including Steve Cohen's Point72, saw positive returns in May, with Point72 gaining 2% for the month and 10.5% year-to-date. However, many funds struggled to match the S&P 500's 11% year-to-date gain, which has been fueled by enthusiasm for technology and AI. Asian banks led sector growth in May, indicating a positive trend for the region's banking sector. Swedencare's stock also saw an increase following an update provided during its capital markets day event.
Looking ahead, Dow Jones Futures indicate a potential decline, while oil prices are increasing, influenced by a new target date set by President Trump concerning Hormuz. Early trading highlighted Palo Alto and Marvell as notable movers, suggesting a market beginning to differentiate between companies meeting high expectations and those facing challenges. The strong stock market rally experienced a pause on Wednesday, with the S&P 500 erasing earlier gains and putting its weekly winning streak in jeopardy. US stocks had previously rebounded on Monday, with AI-linked chipmakers spearheading the gains.