NEW YORK (Reuters) - The Nasdaq reached a record high close on Thursday for the first time in over two years, its latest rally propelled by investor optimism about artificial intelligence, particularly Nvidia and other heavyweight tech stocks.
The Nasdaq advanced 144.18 points, or 0.90%, to 16,091.92, beating its Nov. 19, 2021 record high close of 16,057.44.
Investor euphoria around AI has made Nvidia Wall Street's most widely traded company, replacing Tesla (NASDAQ:TSLA) .
"The anticipation of an artificial intelligence boom has really provided support for these stocks even at extended valuations. It's led to the best performing ones really exceeding what most people thought was possible just a year ago," said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
"For it to continue I think you'd need move past the idea of artificial intelligence as a revolution and begin to see revenue growth directly attributable to it."
The tech-heavy index began its latest rally after its closing low in December 2022, which was down more than 30% from its November 2021 record high as investors worried about inflation and rising interest rates dumped growth stocks with high valuations.
The Nasdaq is the last of Wall Street's three major stock indexes to reach a record high close. After selloffs through most of 2022, the S&P 500 has now hit a string of record highs since late January, and the Dow Jones Industrial Average returned to record highs in late 2023.
Much of the Nasdaq's recovery in recent months has been fueled by optimism the Federal Reserve will soon begin cutting interest rates along with the AI-related tech euphoria.
Nvidia has surged 60% so far this year and this month eclipsed Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) to become Wall Street's third most valuable company, with a market capitalization of $1.94 trillion.
Microsoft (NASDAQ:MSFT), another major AI winner, has gained 10% in valuation to $3.03 trillion in 2024, replacing Apple (NASDAQ:AAPL) as the world's most valuable company.
Nvidia rose 1.9% on Thursday after jumping last week following a forecast of a roughly three-fold surge in quarterly revenue.
The Nasdaq and S&P 500 are both up about 7% in 2024.