Tech Stocks Defy Geopolitical Strain as AI Sector Powers Rally

Nasdaq 100 gains as AI and semiconductor strength, led by Nvidia and Meta, overshadows Middle East tensions and a drop in oil prices eases inflation fears.

In a display of market resilience, the Nasdaq 100 posted significant gains despite escalating tensions in the Middle East and an ongoing blockade of the Strait of Hormuz. The recovery was largely fueled by strength in semiconductor and artificial intelligence stocks, which temporarily overshadowed broader geopolitical concerns.

AI and Chipmakers Lead the Charge

The most pronounced advances came from companies tied to AI infrastructure and semiconductor manufacturing, highlighting where investor confidence remains strongest.

• Nebius Group surged 13.3% following reports of a $12 billion infrastructure deal with Meta Platforms.
• Micron Technology advanced 5.7% after announcing plans for a second high-performance chip fabrication plant in Taiwan.
• Meta Platforms shares rose 3.2%, bolstered by reports of a planned 20% reduction in staffing to reallocate resources toward AI investments.
• Nvidia gained 2.6%. During the GTC conference, CEO Jensen Huang forecast $1 trillion in orders for Blackwell and Vera Rubin systems by 2027. The stock also found support from the cancellation of planned U.S. export restrictions on AI chips.
• Tesla increased 2.1%, benefiting from the broader tech uptrend and the announcement of its "Terafab" AI chip project.

On the losing side, Beyond Meat fell 5% after a weak Q4 sales report. Energy stocks edged lower in tandem with declining oil prices.

Oil Price Retreat Eases Market Pressure

A key contributor to the positive sentiment was a sharp pullback in oil prices. West Texas Intermediate crude fell 5.3% during the session to approximately $93.50 per barrel. The decline came after U.S. President Trump called on allied nations for support in securing the Strait of Hormuz, alleviating immediate inflationary pressures. Reflecting the calmer mood, the CBOE Volatility Index (VIX) dropped 13.5% to 23.5.

The Nasdaq 100 closed at 22,374 points, having reached an intraday high of 22,421. Trading volume was 15% above the 30-day average, lending conviction to the day's advance. Advancing issues outnumbered decliners by a 3-to-1 ratio.

Technical and Macroeconomic Backdrop

From a technical perspective, the index's close allowed it to break through several near-term resistance levels. The next significant hurdle is seen around 22,550 points, while support appears firm near 22,100. In a supportive development for growth-oriented stocks, the yield on the benchmark 10-year U.S. Treasury note fell 6.5 basis points to 4.219%.

Market attention now turns to the Federal Reserve, which begins a two-day policy meeting tomorrow. While no change to interest rates is anticipated, the updated "dot plot" projections and commentary from Chair Jerome Powell will be scrutinized for clues on the future policy path. Elevated energy prices have complicated the Fed's calculus, limiting its flexibility. Should bond yields remain stable and Powell avoid any unexpectedly hawkish signals, the Nasdaq 100 may be positioned to test the 22,500-point level.