Here’s what really bothers me about the Nasdaq blowout

Here are the takeaways from today’s Morning Brief, which you can register to receive every morning in your mailbox accompanied by:

The Nasdaq Composite crossed the 17,000 mark for the first time last week.

I’m not really one to get excited about record highs on major exchanges or certain stocks, but I thought this “milestone” was really cool.

When I started my career in the summer of 2004, the Nasdaq Composite was at around 1,800 points and not far from the dot-com bankruptcy. That’s a nine-fold increase in 20 years – at the same time, my hairline has increased nine-fold!

Today, we’re seeing another technology boom, with daily advances in generative AI fueling the rise of companies like Nvidia (NVDA), Anthropic, and OpenAI. While some of these technologies are scary, there is no denying the impact they are having on the perception of value in markets.

And throughout the last week, I’ve received the latest information on how the spread of AI is powering financial statements and insights.

HP Inc. (HPQ) CEO Enrique Lores told me (video above) that a factor in the company’s above-consensus EPS guidance for the second quarter was the release of more expensive AI PCs in mid-June. This will be the first generation of AI PCs from HP with more powerful processors to support various AI-related tasks.

Sumit Singh, CEO of Chewy (CHWY), didn’t explicitly mention AI in our conversation, but you could see how it’s starting to drive better sales and margins. My understanding is that the company is able to respond more quickly to consumer needs because of its investments in automated technology.

A similar vibe was felt when I spoke to Fran Horowitz, CEO of Abercrombie & Fitch (ANF), which uses new technologies to keep inventories low and then “chase” the demand signals they receive in real time. The end result: an impressive increase in margins.

Exciting things!

And it all helps to understand the excitement surrounding many large-cap tech stocks.

But then there were these rough numbers and guidance from Salesforce (CRM).

Phew.

I wrote about them at dawn on our live markets blog because I couldn’t get over how disappointing the quarter had been – it really came out of left field, given the new suite of the company’s AI offerings.

Still, forecasts have been poor and Salesforce may stay away from the hot AI market until the macroeconomic backdrop improves.

But Salesforce’s shocking quarter had me digging into the tech-heavy Nasdaq, particularly the Nasdaq 100 – the 100 largest non-financial companies listed on Nasdaq – to see if there were any warning signs .

The story continues

In short, I don’t like what I found, for you who believe that stock prices are the truth – or a predictor of future fundamentals.

As the Nasdaq 100 hovers around new highs amid strength from names like Nvidia and Apple (AAPL), far fewer stocks are holding above their 50-day moving averages, according to new research from Sundial Capital Research. Less than 60% of Nasdaq 100 stocks were holding above their 50-day moving averages recently…