The Nasdaq Composite Index reached a historic milestone on Thursday, marking a record-high close for the first time in over two years. Nvidia and other tech stocks recorded remarkable gains, propelling the market amid investor enthusiasm surrounding artificial intelligence (AI).
The Nasdaq index advanced 0.90 percent or 144.18 points to 16,091.92 on Thursday, beating its November 19, 2021 record high close of 16,057.44.
Nvidia’s dominance
Leading the charge is Nvidia, which has emerged as the face of Nasdaq’s growing interest in AI technology. With a staggering 60 percent surge in its stock price this year, Nvidia has cemented its position as Wall Street’s third most valuable company, boasting a market capitalization of $1.94 trillion. The company’s dominance extends to controlling approximately 80 percent of the high-end AI chip market. Hence, it supplies crucial components to tech giants like Microsoft, Alphabet, and Meta Platforms.
Nasdaq’s resurgence
The Nasdaq’s recent rally marks a remarkable turnaround from the challenges it faced in December 2022. Previously, concerns over inflation and rising interest rates dumped growth stocks with high valuations. However, since hitting a closing low in late 2022, the index has staged an impressive recovery fueled by optimism surrounding the Federal Reserve’s potential interest rate cuts and the relentless advancement of AI-related technologies.
Record-breaking trading activity
While Nvidia has been the standout performer on the Nasdaq, Microsoft has also significantly benefited from the AI boom. The tech giant has witnessed a 10 percent increase in valuation this year to $3.03 trillion. Moreover, it surpassed Apple and became the world’s most valuable company.
The surge in AI-related optimism on the Nasdaq is reflected not only in stock prices but also in trading activity. Nvidia has emerged as the most traded stock by value on Wall Street, with investors exchanging $40 billion worth of its shares on Thursday alone. This unprecedented level of trading activity underscores the market’s intense focus on companies at the forefront of AI innovation.
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Impressive financial performance
The financial performance of AI-related companies has also been remarkable, with the S&P 500 technology sector witnessing a 7.6 percent growth in earnings for the December quarter compared to the previous year. This outperformance, fueled by companies like Nvidia, has surpassed initial projections and contributed to the overall strength of the Nasdaq and S&P 500, both of which have posted gains of approximately 7 percent in 2024.
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