Tech Stocks Lead US Market Rally: Nasdaq Hits New High as AI Chip Demand Sparks Rebound

Driven by the continued explosion in demand for artificial intelligence (AI) chips, US tech stocks have staged a strong rally, with the Nasdaq Composite Index hitting a new record high. Tech giants like Nvidia (NVDA) and Apple (AAPL), buoyed by better-than-expected earnings and the AI theme, have successfully ignited a fresh rebound in the market. Meanwhile, investor expectations regarding the Federal Reserve's future monetary policy path are subtly shifting, adding uncertainty to this upward trend.

AI Chip Demand Sparks Rebound: Nvidia and Apple Lead the Way

As the undisputed leader in AI chips, Nvidia's earnings have become a key barometer for the entire tech sector. The company's latest quarterly revenue and profit significantly exceeded analyst estimates, with its data center business—particularly GPUs used for training large language models—experiencing a surge in demand. This strong performance not only propelled NVDA's stock to a new all-time high but also lifted other chip stocks like AMD and Broadcom, creating a clear sector-wide ripple effect.

Meanwhile, Apple is also showing new growth potential in the AI space. Despite facing market saturation in its traditional hardware business, Apple's recent moves in generative AI technology, along with rumors of an upcoming AI-enhanced Siri, have fueled investor optimism about future services revenue growth. AAPL shares have steadily climbed following its earnings release, further solidifying the Nasdaq's upward momentum.

Analysts note that the explosive growth in AI chip demand is not a short-term phenomenon. From cloud computing giants to startups, the hunger for computing power is driving the entire supply chain into a new expansion cycle. This structural trend provides solid earnings support for tech stocks and has significantly increased the market's tolerance for valuations of AI-related stocks.

Nasdaq Hits New High: Tech Stocks Boost Market Confidence

Driven by NVDA and AAPL, the Nasdaq has recently broken through key psychological levels to reach a new all-time high. This performance contrasts sharply with the more modest gains in the S&P 500 and Dow Jones Industrial Average, highlighting the dominant role of tech stocks in the current market.

In terms of fund flows, institutional investors are accelerating their shift from traditional value stocks to tech growth stocks. According to market data, ETFs tracking the Nasdaq 100 have seen significant net inflows over the past month, indicating rising optimism about the tech sector. This preference is not only due to the appeal of the AI theme but also reflects cautious optimism about a soft landing for the macroeconomy.

Notably, the Nasdaq's new high comes against a backdrop of the Fed maintaining a high-interest-rate environment. This breaks the previously common belief that "high rates necessarily suppress tech stock valuations." In reality, catalyzed by the AI technology revolution, the earnings growth of tech companies has been sufficient to offset the valuation pressure from rising rates.

Fed Policy Expectations: The Timing of Rate Cuts vs. Inflation

Despite the strong tech rally, expectations about the Fed's policy path remain a key variable for the market outlook. According to the latest Fed meeting minutes, officials remain cautious about whether inflation will sustainably return to the 2% target, with most members favoring keeping rates at current levels for a longer period.

However, recent economic data—including lower-than-expected Consumer Price Index (CPI) and Producer Price Index (PPI) readings—has led some investors to bet that the Fed could begin cutting rates as early as the third quarter of 2024. This shift in expectations is directly reflected in the bond market: the yield on the 10-year US Treasury note has fallen from recent highs, providing additional support for tech stock valuations.

But analysts warn that if inflation data proves sticky or the labor market remains strong, the Fed's rate-cut timeline could be pushed back further. This uncertainty means that while tech stocks enjoy the AI dividend, they must also contend with macroeconomic policy risks.

Market Outlook: Can the AI Theme Sustain?

Looking ahead, whether tech stocks can maintain their current rally largely depends on the sustainability of AI chip demand and the ability of related companies to deliver on earnings. Currently, market expectations for earnings at leaders like NVDA are already high, and any underperformance could trigger a sharp correction.

On the other hand, whether consumer electronics giants like Apple can successfully convert AI technology into actual revenue growth is also a key focus for the market. If AI applications expand from data centers to end-user devices like smartphones and PCs, it could open up a much larger market.

Overall, the Nasdaq's new high in this AI-chip-demand-driven rebound marks tech stocks' return as the core driver of the US stock market. With the Fed's policy path still unclear, investors need to closely monitor inflation data and tech company earnings to navigate the rhythm and risks of this structural trend.