Tech Stocks Lead Nasdaq to Record High: Can the AI Rally Persist? Nvidia and Apple Are Key

Tech Stocks Lead, Nasdaq Hits Another Record High

Recently, the US stock market has seen another strong rally, with the tech-heavy Nasdaq Composite Index repeatedly setting new all-time highs, capturing the attention of global investors. Amid the ongoing artificial intelligence (AI) boom, the robust performance of heavyweights like Nvidia and Apple has been the core engine driving the index upward. This article dissects the underlying logic of this rally from the perspectives of heavyweight stock contributions, AI industry trends, and market sustainability.

Heavyweights Lead, Nasdaq Hits New Highs

As the largest constituents of the Nasdaq index, Nvidia and Apple's stock movements have a significant impact on the index. Nvidia, with its dominant position in AI chips, has seen its stock soar over the past year, briefly surpassing a $3 trillion market cap and becoming one of the most valuable companies globally. Apple, relying on stable earnings and ecosystem barriers, continues to attract capital inflows. According to public market data, these two stocks together account for nearly 15% of the Nasdaq-100 index weight, and their gains directly lift the index.

Additionally, other large tech stocks like Microsoft, Google, and Amazon have also strengthened, creating a sector-wide resonance. Market analysts believe this rally, driven by top companies, exhibits a clear "weight effect," where a few stocks contribute the majority of the index's gains. According to Bloomberg Intelligence data, as of the latest quarter, the tech sector contributed over 70% of the Nasdaq's gains.

The AI Boom: From Concept to Earnings Validation

The core driver of this tech rally is undoubtedly the explosion of generative AI. Since the debut of ChatGPT in late 2022, global tech giants have ramped up AI infrastructure investments, boosting the prosperity of the GPU, data center, and cloud services supply chain. Nvidia's data center business revenue has doubled quarter over quarter for several consecutive quarters, and its latest quarterly report shows that this segment now accounts for over 80% of total revenue, becoming the company's primary profit source.

Meanwhile, AI applications are expanding from model training to inference, including autonomous driving, medical imaging, and industrial automation. According to IDC forecasts, the global AI market will surpass $300 billion by 2026, with a compound annual growth rate above 20%. This shift from "concept hype" to "earnings delivery" has bolstered investor confidence in tech stocks.

Market Structure: Concentration Risks Emerge

Despite the impressive index performance, structural risks within the market cannot be ignored. Currently, the top ten constituents of the Nasdaq-100 index account for over 50% of its weight, a record high. This means that if these leading tech stocks experience a pullback, the index could face significant volatility. Historical precedent, such as the 2000 dot-com bubble, showed similar concentration characteristics followed by a multi-year market correction.

Moreover, the high-interest-rate environment pressures growth stock valuations. Although the Fed has hinted at potential rate cuts, the exact timing remains uncertain. According to the CME FedWatch tool, market expectations for a September rate cut are around 70%, but if inflation data fluctuates, these expectations could be delayed. In this context, whether tech valuations can persist depends on whether earnings growth can justify the high multiples.

Sustainability of the AI Boom

Opinions are divided on whether the AI rally can continue. Optimists argue that AI, like the internet in its early days, will reshape productivity across industries, offering immense long-term growth potential. Goldman Sachs Research, in its latest report, notes that AI investment as a share of GDP is still in its early stages and could boost global productivity by 1.5 percentage points over the next decade.

Pessimists worry that current AI infrastructure investment may be ahead of actual demand. Some cloud service providers' capital expenditure growth far exceeds revenue growth, and if enterprise application monetization falls short, an "AI bubble" could emerge. For example, Microsoft and Google's combined capital expenditures have exceeded $100 billion, yet AI-related revenue still accounts for less than 10% of total revenue.

Outlook: Focus on Earnings and Policy Signals

In the near term, the Nasdaq's trajectory will depend on upcoming tech earnings and Fed policy moves. If Nvidia, Apple, and others continue to beat expectations, the index could maintain its strength; conversely, signs of slowing growth could trigger profit-taking. Additionally, policy uncertainties in this US election year may also disrupt market sentiment.

Overall, the tech rally is supported by fundamentals but also includes some market sentiment factors. Investors should consider valuation rationality and portfolio diversification while chasing trends. For long-term investors, the direction of the AI industry remains clear, but short-term volatility is inevitable.