Investor enthusiasm for artificial intelligence has lifted Nvidia (NVDA.O) and other tech giants to new highs on Thursday, sending the Nasdaq (.IXIC) to a record high. First in almost two years, the index has done so.
The Nasdaq closed at 16,091.92, up 144.18 points, or 0.90%, from its November 19, 2021 record high of 16,057.44. "The anticipation of an artificial intelligence boom has really provided support for these stocks even at extended valuations," said Cherry Lane Investments' Rick Meckler, a New Vernon, New Jersey family investment office.
"For it to continue I think you'd to need move past the idea of artificial intelligence as a revolution and begin to see revenue growth directly attributable to it." Nvidia, the most publicly traded company on Wall Street (recently surpassing Tesla,.TSLA.O), represents the market's growing interest in AI.
The Santa Clara, California-based company dominates the high-end AI chip market, with OpenAI (ChatGPT's developer), Microsoft (MSFT.O), Alphabet (GOOGL.O), and Meta Platforms (META.O) competing for generative AI components.
Following its December 2022 closing low, the tech-heavy index began its latest comeback after falling more than 30% from its November 2021 record high. Investors sold high-valuation growing enterprises due to inflation and interest rate concerns. Only the Nasdaq has not closed at a record high among Wall Street's three main stock indices. After selloffs in 2022, the Dow Jones Industrial Average (.DJI) returned to record highs in late 2023, while the S&P 500 (.SPX) has been on a rampage since late January.
The Nasdaq's recent recovery is due to AI tech euphoria and expectations that the Federal Reserve will soon lower interest rates. Nvidia overtook Amazon (AMZN.O) and Alphabet last month as Wall Street's third most valuable company with $1.94 trillion. The company's share price rose 60% this year.
Microsoft, another AI champion, overtook Apple (AAPL.O) as the world's most valuable company in 2024 with a $3.03 trillion valuation, a 10% rise. Nvidia rose 1.9% Thursday. A week ago, Nvidia established a Wall Street record by raising its stock market value by $277 billion in one session after predicting a nearly tripling of quarterly sales and fueling the AI surge.
According to LSEG figures, Nvidia and other AI-related companies helped improve S&P 500 technology sector December-quarter earnings to 7.6% per year, beyond the 6.2% projected at the start of 2024.
Nvidia recently outperformed all Wall Street companies in daily value. On Thursday, investors traded $40 billion worth of its stock, almost twice as much as Tesla, Wall Street's second most traded company. In the last 30 days, 25% of U.S. single-stock option premiums were Nvidia options.
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