Behind Nasdaq Performance: How AI & Market Dynamics Shake Up Tech

• Fundamentals, particularly strong earnings driven by the AI trade, are the primary pillar affecting market performance.
• The AI trade has matured, shifting focus to companies demonstrating tangible earnings and results, especially in semiconductors and hardware.
• There's a striking subsector divergence within the Nasdaq-100, with semiconductor and hardware companies adding ~23 percentage points to performance, while software companies detracted ~3 percentage points for the quarter.
• Despite the Nasdaq-100's strong price performance (up ~44% over 18 months), its forward P/E has contracted by about 8% due to rapidly rising earnings forecasts.

Sal Bruno of Nasdaq discusses three pillars affecting market performance: fundamentals, geopolitical events, and macroeconomic data. He highlights the maturation of the AI trade, leading to a significant divergence in performance within the Nasdaq-100, where semiconductor and hardware companies are outperforming software due to tangible earnings and AI CapEx spending. Despite strong price gains, the Nasdaq-100's forward P/E has contracted, reflecting robust earnings growth.