The Nasdaq Just Did Something It Hasn't Done Since 2020, and Here's What Could Happen Next
The Nasdaq-100 index has rebounded from a 12% decline to a new record high after a ceasefire agreement between the US and Iran. The index's performance is closely tied to AI stocks, which face potential risks due to reduced spending plans by top developers.
The Nasdaq-100 stock market index, heavily exposed to AI stocks like Nvidia, recently recovered from a 12% decline to a new record high. The decline was triggered by the US-Iran conflict and soaring oil prices, but a ceasefire agreement and the reopening of the Strait of Hormuz led to a collapse in oil prices and a stock market rally. The index logged a 17% gain in 13 trading days, its highest return since 2020. Concerns about AI infrastructure spending have risen after OpenAI reduced its estimated spending on computing capacity. The technology sector accounts for 60% of the Nasdaq-100's value, making it vulnerable to risks in the AI industry, including delayed or cancelled data center openings. Despite these risks, history suggests the Nasdaq-100 will continue to rise long-term, having more than doubled since its last 13-day rally in 2020.
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