The AI boom just powered tech stocks to their strongest start to a year since 1983
REUTERS/Eric Thayer
- The tech-heavy Nasdaq Composite jumped 32% over the first half of 2023.
- That's the index's best start to a year in four decades, according to the Financial Times.
- Investors have piled into Big Tech stocks over the past six months, inspired by the explosion of interest in AI.
Artificial intelligence just helped technology stocks to their best start to a year since 1983.
The Nasdaq Composite, which tracks the share price of over 2,500 companies and is heavily weighted toward tech, rose 32% over the first six months of 2023 – which was its best first half in four decades, according to Bloomberg data cited by the Financial Times.
The stock-market index also recorded its biggest jump for any half-year period since the dot-com boom helped it soar 73% in the second half of 1999, per Dow Jones.
AI has powered much of the Nasdaq's surge over the past six months, with investors piling into related stocks ever since interest in ChatGPT exploded at the start of the year.
Chipmaker Nvidia, electric-vehicle manufacturer Tesla, and social-media giant Meta Platforms have emerged as three of the main winners of the AI craze.
Each racked up triple-digit gains in the first half of 2023 to solidify their status as members of a high-flying group of tech stocks that some have dubbed "The Magnificent Seven", alongside Apple, Microsoft, Google parent Alphabet, and Amazon.
But some analysts believe that the Nasdaq's sensational early-2023 run won't last over the second half of the year, warning investors to take some profits now ahead of a potential correction in AI stock valuations.
"We don't believe the AI trend is a bubble but advise investors to be selective on AI-related stocks after the strong year-to-date rally," UBS Global Wealth Management equity strategist Sundeep Gantori said in a recent research note.
Tech stocks have also benefited from the Federal Reserve easing up on its monetary-tightening campaign over the first half of 2023 – because when interest rates stop rising, returns from investment avenues such as savings accounts tend to plateau, prompting investors look at other options such as stocks.