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Artificial Intelligence linked stocks are flying high in the market as part of a rally sparked by the Open AI ChatGPT tool’s growing popularity.  Growing focus on artificial intelligence technology and what it could do in future is getting Wall Street all excited.

AI Stocks Rally

ChatGPT continues to attract strong interest owing to its ability to carry out complex computing operations. In addition, reports that the tool could help select stocks that could beat the market are increasingly fueling demand for AI-linked stocks.

NVIDIA is one of the stocks rallying amid expectations that demand for its chips used to power AI systems will soar, the stock was up by more than 30% in January as Wall Street expected the chip giant to dominate the markets for graphic chips used to power software models enabling artificial intelligence technology. Holdings Inc, a company that uses artificial intelligence to help people analyze data, has also seen its stock surge fivefold amid the AI stock craze. BuzzFeed Inc is another stock on the move, rallying by more than 300% last week. The rally came as the company’s Chief Executive officer confirmed plans to focus on generating and delivering AI-inspired content. The rally came against a backdrop of the company embarking on a cost-cutting drive as it struggles with a decline in advertising revenue.

Chinese search giant Baidu has also benefited from the increased focus on companies with increased interest in artificial intelligence technology. The company has announced plans to rival Open AI by launching a   tool with capabilities similar to ChatGPT.

AI Focus Impact

The explosive rallies around AI-linked stocks share similarities to the craze triggered by blockchain technology, amid the blockchain technology craze. Companies linked to the ledger technology rallied only for the frenzy to dissipate and the gains to disappear.

Until the bubble around AI-linked stocks bursts, there is growing prospects of a spike in companies adding the revolutionary technology into their names. According to Michael O’Rourke of Jonestrading, we could see a spike in a secondary stock offering of startups or companies working on AI innovation.

The hype around AI stocks comes amid growing expectations that the US Federal Reserve will go slow on interest rate hikes. Such a move is expected to support the ever-fragile economy while lowering the prospect of borrowing costs spiking. Consequently, tech stocks have been on the move in recent days.

FED Rates Impact

Tech heavy Nasdaq Index has already bottomed out of the bear territory and moved above the 200-day moving average. The index is up by more than 11% for the year. The move already hints at further upside action, which could see tech stocks heavily battered last year post significant gains in the coming weeks.

Tech stock outlook hinges closely on what the FED will do on monetary policy tightening. The stocks were some of the hardest hits as the FED hiked interest rates at the fastest rate in decades last year. The move raised concerns of the economy tipping into recession as well as affecting the company’s ability to acquire cheap capital to enhance development of new products and services.