Nasdaq Boosted by Broadcom Announcement: AI Euphoria Fuels Tech Sector

U.S. stock index futures rose on Friday, led by Nasdaq 100 futures, after Broadcom's positive sales forecast sparked new enthusiasm around artificial intelligence. Broadcom exceeded Wall Street expectations with its quarterly sales forecast and predicted increasing demand for its custom AI chips in the coming years, driving the company's shares up 14.5% in pre-market trading. "Customers are excited about how AI could boost their profits... this active interest has also put Broadcom in the investor spotlight as an alternative for AI growth alongside Nvidia," explained Dan Coatsworth, an investment analyst at AJ Bell. This optimism extended to other chip manufacturers. Shares of Marvell Technology rose 5.7%, Micron Technology added 1.2%, and Nvidia, a key player in the AI sector, gained 1.1%. In the previous week, the Nasdaq reached the 20,000 mark for the first time, driven by a steady tech stock trend. An inflation rate in line with expectations, making a 0.25 percentage point interest rate cut by the Federal Reserve next week more likely, bolstered the momentum. Traders are betting with over 96% probability on a rate cut at the central bank meeting on December 17-18, but point to the possibility of a pause in January. "For the year 2025, we continue to expect healthy growth and very gradual easing of inflation. FOMC officials have indicated that current policy has now reached a point where further cuts could occur more slowly," commented Paolo Zanghieri, Senior Economist at Generali Asset Management. As of 7:00 a.m. ET, Dow E-minis were up 85 points, or 0.19%, S&P 500 E-minis rose 19 points, or 0.31%, and Nasdaq 100 E-minis increased 138.5 points, or 0.64%. After a brief standstill the previous day on Wall Street, triggered by some hot economic data ahead of the Fed meeting, the S&P 500 and the Dow recorded weekly losses. The Nasdaq, however, was on track to end the week in positive territory. The three main indices reached record highs multiple times this year, as investors turned to strong tech stocks to capitalize on the hype around artificial intelligence. U.S. stocks closed November strongly following Donald Trump's election victory, which raised hopes for business-friendly policies likely to contribute to higher corporate profits. December started positively overall. In other movements, Salesforce rose 1.7% after KeyBanc upgraded the cloud software provider's stock from "sector weight" to "overweight," while D.R. Horton fell 1% after J.P. Morgan downgraded the homebuilder's rating to "underweight.