Nasdaq's Best Quarter in 6 Years: AI Stocks to Watch

The Nasdaq Composite surged 21.4% in the second quarter, its best performance in six years. Both the Nasdaq and S&P 500 posted impressive gains, fueled by record order backlogs for AI and data center companies.

Analysts are raising earnings estimates, setting the stage for a strong earnings season. The dollar strengthened to a four-decade high against the yen, adding volatility to some gold stocks but reflecting US economic resilience.

The job market is improving, with ADP reporting that businesses of all sizes added jobs in June. Planned layoffs fell 53% from May, and economists expect 115,000 new jobs in the official payroll report.

GDP growth is projected to hit 5-6% in Q3, driven by AI productivity gains of up to 4%, record energy exports, and robust consumer spending. Housing is showing signs of life, though not perfect.

Overall, the article paints a picture of a strong economy and AI-driven market leadership, with the Nasdaq leading the charge higher.

Record AI and data center order backlogs directly benefit companies like NVIDIA, which supplies chips for AI training and inference. This backlog ensures strong revenue visibility for quarters ahead.

The strong dollar may pressure multinational earnings, but for US-focused tech firms with pricing power, the impact is muted. AI productivity gains are seen as a catalyst for GDP growth, which could lift the entire market.

Improving job market and consumer spending support demand for tech products and services, especially cloud computing and AI platforms from Microsoft and Amazon.

However, a potential slowdown in housing or a shift in Fed policy could temper gains. The record dollar may also hurt exports, though energy exports are a bright spot.

For investors, this environment favors growth stocks with AI exposure, as the earnings season could bring positive surprises and raise forward guidance.