Shares of technology companies experienced a notable increase as a decline in Treasury yields attracted more investors to the sector.
Tech Sector’s Valuation and “Risk-Free” Rate
According to strategists, the valuation of tech companies is influenced by changes in the “risk-free” rate of return on the Treasury markets due to their “long duration” growth potential. As a result of subdued inflation data, Treasury yields witnessed a significant drop on Tuesday. Consequently, companies with high growth expectations in the distant future, such as Artificial Intelligence chipmaker Nvidia, reached new all-time highs. Nvidia’s shares broke the $500 mark for the first time.
SPDR Select Sector Technology ETF
The SPDR Select Sector Technology exchange-traded fund, which monitors the tech industry group of the S&P 500, witnessed a 2% surge, reaching a new closing high of $182.04. The fund has recorded a 48% increase year-to-date.
Khosla Ventures Raising $3 Billion
Khosla Ventures, known for its successful investment in ChatGPT owner OpenAI, is currently nearing the completion of raising $3 billion for its latest venture funds. This achievement opposes the overall slowdown observed in Silicon Valley investment activity.
Foxconn Technology’s Contingency Plans
Foxconn Technology, a major supplier for Apple, has formulated contingency plans to address any potential repercussions it may face in China due to its founder’s bid for the Taiwan presidency.
Information sourced from Rob Curran at Dow Jones.