Shares of Nvidia reached a new all-time high on Monday, surpassing their previous peak from July. The stock gained 2.4%, closing at $138.07, pushing Nvidia’s market value to $3.39 trillion—within striking distance of Apple's $3.5 trillion market-leading valuation.
This rise comes as renewed optimism about a soft landing for the US economy fuels a resurgence in large technology stocks. After a summer slowdown, Nvidia and other tech giants have regained momentum, particularly after the Federal Reserve initiated interest rate cuts last month, driving the broader market higher.
“The rotation away from megacap tech stocks may have run its course,” said Dec Mullarkey, managing director at SLC Management. “Investors turned cautious ahead of the Fed meeting, but the central bank’s tone and recent data have been encouraging for risk assets.”
Information technology and communication services were among the worst-performing sectors in the S&P 500 during Q3. However, since the Fed's September meeting, both sectors have rebounded, with the IT sub-index climbing over 7%.
Despite the rally in tech, analysts point out that this market environment differs from the exuberance seen in early 2024. More than 60% of stocks in the S&P 500 have made gains recently, with strong performances in cyclical sectors like industrials and energy.
“I’m not convinced we’re seeing a full return to tech dominance,” said Kevin Gordon, senior investment strategist at Charles Schwab. “It looks more like a catch-up. Other sectors, like financials and industrials, had hit highs before tech. There’s room for tech to recover some ground, especially as the sector tends to perform well during gradual Fed rate cuts.”
Positive third-quarter earnings, particularly from JPMorgan Chase and Wells Fargo, have also contributed to the optimism. Additionally, stimulus efforts from China have boosted confidence about global growth prospects.
“There’s been a material shift,” Mullarkey added. “Many are revising their forecasts for stronger growth and earnings. China’s stimulus efforts have also improved the global growth outlook.”
