On Wednesday, the tech sector witnessed a monumental day as Alphabet (GOOG, GOOGL), Tesla (TSLA), Amazon (AMZN), and Meta (META) all touched new all-time highs, propelling the Nasdaq Composite Index above the 20,000 mark for the first time. This surge added approximately $416 billion to the market capitalization of tech’s seven trillion-dollar companies.
Alphabet’s shares soared by 11.4% over two days following the company’s announcement of its latest quantum computing chip. Described as a breakthrough, this chip, which according to the search giant can solve a problem in just five minutes that would take one of the world’s fastest supercomputers an astounding septillion years to complete, signifies an important leap towards practical quantum computing applications in fields like drug discovery and battery design. Alphabet’s stock closed at $195.40 after printing intraday as high as $195.61, surpassing its previous peak of $191.18 from July 10.
Tesla, on the other hand, saw its shares jump nearly 6% to close at $424.77, breaking its previous record from November 4, 2021. This rally has been fueled by a 69.7% increase since Donald Trump’s election, with market optimism banking on the anticipated beneficial relationship between Tesla’s CEO Elon Musk and the incoming president.
While Amazon, Apple (AAPL), and Meta have been setting or nearing new highs frequently, Apple experienced a slight dip of 0.5% on this day. Microsoft (MSFT) and Nvidia (NVDA), though not reaching new peaks, remain close to their recent highs, with Microsoft nearly 20 points off its 52-wk high and Nvidia 6% below its $152.89 record from last month.
The tech megacaps’ significant market influence has been a major driver for the Nasdaq’s 33.5% year-to-date gain, culminating in a 1.77% increase on Wednesday to close at 20,034.89. This market enthusiasm follows Trump’s election, with investors betting on a reduction in regulatory constraints and an increase in business-friendly policies.
One such policy shift was evident with Trump’s appointment of Andrew Ferguson as the new chair of the Federal Trade Commission, replacing Lina Khan, known for her stringent oversight of tech mergers. Trump’s choice of Ferguson, whom he described as the most “America First, and pro-innovation FTC Chair,” signals a potential easing of regulatory pressures on tech giants.
Adding to the bullish outlook, Tom Lee from Fundstrat Global Advisors highlighted on CNBC that the tech sector could see further gains, especially with the expectation of a Federal Reserve rate cut in December. The recent consumer price index data, showing a 12-month inflation rate of 2.7%, supports this anticipation, suggesting a favorable environment for tech stocks sensitive to interest rate changes.
This combination of technological innovation, political shifts, and monetary policy expectations paints a picture of a tech market in robust health, poised for further growth as 2025 unfolds.
Leave a Reply