Tech stocks were the stars of the equities market on Friday, with a wide range of them jumping higher in price across the trading session. That followed the impressive quarterly results and guidance proffered by a top name in the hardware field. Artificial intelligence (AI) was at the heart of that outperformance, so AI stocks were — hardly for the first time in recent months — a particular target of the bulls.

That’s why it helped if a company had “AI” baked into its name, as evidenced by Holdings‘ (BBAI 2.98%) 3% gain. Hardware and component makers did well thanks to the aforementioned peer, with Broadcom (AVGO 7.59%) advancing by almost 8% and Micron Technology (MU 5.01%) rising 5%. Taiwan Semiconductor Manufacturing (TSM 4.07%) and Super Micro Computer (SMCI 4.54%) both pushed more than 4% higher.

Dell delivered a dandy of a quarter

The spark that produced the explosion was the fourth-quarter earnings report released after market close Thursday by storied hardware specialist Dell Technologies (DELL 31.62%). The company soundly beat the average analyst estimate for net income while edging past that for revenue.

That alone wasn’t the reason why Dell stock raced nearly 32% higher in price the following day. Investors were thrilled by the fact that much of this was powered by intense demand for AI servers, a niche the clever company has dived into. Orders for such products rose 40% not year over year, but from the third quarter, with Dell’s backlog surging to $2.9 billion. This is absolutely a case of a company being in the right business at the right time.

And staying there, too. Dell is predicting that AI demand will boost its fundamentals in 2024 and, judging by their reaction, investors fully accept that forecast. Hence the knock-on effect for other hardware makers and for AI niche players.

On top of that, the Federal Reserve is expected to start cutting its key interest rate before long, even though some pronouncements from Fed officials indicate hesitancy. Lower rates tend to increase investor appetite for risk, and as ever, high-growth tech stocks fall pretty far on the risky side of the spectrum.

An AI-powered future

No one should necessarily expect 30%-plus pops from their favorite tech titles soon, but this is clearly a sector with plenty of room to run. Companies of nearly every type and description stand to benefit from the effective integration of AI functionalities, so that hot demand likely won’t cool in the proximate future. The tech stock market is going to be lively this year and, in many cases, quite lucrative for its participants.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and Super Micro Computer. The Motley Fool has a disclosure policy.

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