U.S. stocks ended at record highs, marking their best month since 2020, as investors bet that the artificial intelligence boom would bring huge earnings to U.S. technology giants. The S&P 500 index rose by 10% in April, the largest monthly increase since the breakthrough in the development of a new crown vaccine in November 2020. Previously, U.S. stocks have rebounded from the decline after a surge in energy prices triggered a market sell-off in the early days of the Middle East conflict.

Technology stocks led this rebound. The Nasdaq Composite Index, which is heavily weighted by technology, rose 15% in April, recording its best monthly performance since April 2020.

Investors are piling back into U.S. technology stocks as analysts continue to raise corporate profit forecasts to new highs. The market is generally optimistic that leading Silicon Valley companies will increase their investment in artificial intelligence infrastructure construction on a large scale to support economic growth.

Benefiting from the growth rate of its cloud business ahead of its peers, Alphabet rose 10% on Thursday, and its cumulative increase this month has reached about 34%. Chipmaker Intel surged 114% this month on the back of its brilliant financial report, leading the S&P 500; storage giants SanDisk, Seagate Technology and ON Semiconductor also surged.

Mike O'Rourke, an analyst at Jones Trading Company, said that in particular, the sharp rise in the semiconductor sector in April was "completely divorced from fundamentals" and "in the face of the standoff in the Strait of Hormuz, stock investors still have no worries."


Even with a sharp surge in oil prices, this round of stock market gains is still going on as planned. On Thursday, Brent crude oil prices exceeded $125 per barrel, and retail gasoline prices across the United States climbed to about $4 per gallon.

The volatile trends of some leading technology stocks have failed to stop the broader market from strengthening. Yuanverse Platform Company fell about 9% on Thursday. The company reported a decline in user numbers and a further increase in capital expenditures, narrowing its gains this month to 7%; Microsoft fell 4% on the same day.

This week, the first-quarter financial reports released by the four major cloud computing giants confirmed the technology industry’s strong capital expansion plans. Four companies, Amazon, Metaverse Platform, Microsoft and Alphabet, are expected to invest a combined record-breaking US$725 billion in artificial intelligence infrastructure this year, a 77% increase from last year's record high spending.

Maria Vetmane, head of equity strategy at State Street Bank, said: "The financial reports of major technology giants have confirmed that the market demand for artificial intelligence, computing power, and chips is still extremely strong."


Wetmane pointed out that the bank's custody data shows that since the outbreak of the conflict in the Middle East, institutional investors have continued to increase their holdings of U.S. stocks, focusing on the technology and energy sectors. "Capital outflows are occurring in other regions around the world," she said. Bloomberg data also showed that investors had a net inflow of US$125 billion into U.S. stock index funds in April, while similar funds in Europe and Asia all experienced net outflows.

"At the moment, the market prefers sectors with stronger profit margins that can withstand pressure, and the technology industry is the first choice. There is no better choice other than this." Weitemane said.


Citigroup upgraded its rating on U.S. stocks this month and gave it an overweight recommendation compared to other global markets. Beata Manteyi, the bank's global head of equity strategy, said that the technology sector is carrying the market trend alone.

Nomura analyst Charlie McElligott believes that this round of rise has completely ended the market differentiation that lasted from the end of last year to February - before funds once flowed from leading technology AI stocks to other sectors. He added that technology stocks once again completely dominated the performance of the broader market index.

At the same time, economic data released this week showed that although technology stocks led the way strongly and diverged from other sectors, the U.S. economy has begun to be affected by regional conflicts.

As the world's largest economy, the United States' annualized economic growth in the first quarter was 2%, lower than the 2.2% forecast by economists surveyed by Bloomberg. The overall inflation rate, which the Fed focuses on, rose to 3.5% in March, the highest level in nearly three years.

Soaring oil and gas prices may push up inflation, and investors have sharply lowered their expectations for the Federal Reserve to cut interest rates this year.

Dan O'Keefe, Attison Portfolio Manager, said: "The market has mostly been indifferent to various risk events. Whenever the situation is turbulent and uncertainty increases, investors will re-embrace assets with higher certainty."

O'Keefe mentioned that although the repricing of interest rates is expected to impact some stock market sectors, leading technology companies will be minimally affected by interest rate fluctuations.