Broker Check
Nvidia Supercharges the Market

Nvidia Supercharges the Market

February 27, 2024

It’s a rare event when the results from one company can light up the whole stock market, boost investor sentiment, and make us dream about a new technological evolution. Nvidia accomplished just that last week during the release of its earnings report which reignited the market rally in general and technology specifically. The S&P 500 broke above 5100 and the Nasdaq came within 1% of its all-time highs set 27 months ago.

Nvidia is in many ways the epicenter of generative AI with their discrete GPU chips in high demand by major tech companies for generative AI applications, new data centers, gaming, autos, and much more. This is important to the whole economy and stock market because of the trillions of dollars that will need to be invested by corporations to capitalize on AI’s potential. The technological side to all of this isn’t my specialty but how this can impact the stock market cycle is. It’s possible this technological evolution may be a strong driver of corporate spending and earnings which can boost stock market returns over the next few years. We saw this play out in 2023 when the tech heavy Nasdaq had a phenomenal return of 55%. Technology stocks usually suffer when interest rates are high and tech stocks plummeted in 2022. Most analysts forecasted that technology stocks would continue to perform poorly in 2023, with rates still high, but they didn’t anticipate the excitement around AI to drive them higher.

I view last week’s stock market action as supportive of my thesis that there is a paradigm shift (link to that article) from the fear of high inflation and the Fed waiting to cut rates to the realization that the economy is strong and can prosper even with higher interest rates in 2024.

Photograph by: Thomas Kelley on Unsplash

.

.

.

.

.