What Happened?
Shares of global manufacturing solutions provider Flex (NASDAQ: FLEX) jumped 2.6% in the afternoon session after renewed investor enthusiasm for the artificial intelligence boom was sparked by a strong forecast from a major cloud provider.
The optimism was ignited by Oracle, which jumped 30% after forecasting a massive increase in AI-powered cloud revenue. This outlook overshadowed the company's recent earnings miss and reinforced investor confidence in the long-term AI trend, benefiting companies that provide critical infrastructure for artificial intelligence. Underscoring the bullish sentiment, investment bank Barclays raised its year-end S&P 500 target, citing resilient economic growth and continued investor excitement for AI as key drivers for the market's strength.
After the initial pop the shares cooled down to $57.67, up 2.6% from previous close.
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What Is The Market Telling Us
Flex’s shares are quite volatile and have had 16 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 19 days ago when the stock gained 4.9% on the news that the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
Flex is up 49.3% since the beginning of the year, and at $57.67 per share, has set a new 52-week high. Investors who bought $1,000 worth of Flex’s shares 5 years ago would now be looking at an investment worth $5,648.
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