The Nasdaq (QQQ), which holds many technology company names, added 3% in the week. In addition to Nvidia (NVDA) leading the market, the Federal Reserve’s rate decision deserves a small footnote on the rally.
Markets are betting that the Fed’s plans to cut rates just one time is a bluff. They still expect more. Late last year, markets expected six rate cuts. When that did not happen, investors still bid stock prices higher.
Concerns about a technology bubble are growing. NVDA stock trades at a 77 times price-to-earnings multiple.
Stock markets are a forward-pricing machine, so the AI server supplier’s forward growth justifies the $3.24 trillion valuation.
Apple’s (AAPL) sudden surge from $195 to nearly $220 in the week is a euphoric post-reaction to its AI announcement. Apple Intelligence incorporates a third party, ChatGPT, for supplying AI. Microsoft (MSFT) already embraced ChatGPT in its Office 365 product suite. Users may also access the AI through Microsoft’s CoPilot offering.
Risks
Amazon showed signs of selling pressure after the chart indicated a “multiple top” peak at $190.
Your Takeaway
The tech bubble is in the middle phases. The breakout in Taiwan Semiconductor (TSM) and Broadcom (AVGO) suggest that traders may enjoy more stock gains this week.