Tech stocks close out best first half in 40 years, powered by Apple rally and Nvidia boom
Apple CEO Tim Cook stands next to the new Apple Vision Pro headset is displayed during the Apple Worldwide Developers Conference on June 05, 2023 in Cupertino, California.
Justin Sullivan | Getty Images
The last time technology stocks had a better first half, Apple was touting its Lisa desktop computer, IBM was the most-valuable tech company in the U.S. and Mark Zuckerberg hadn’t been born.
On Friday, the Nasdaq wrapped up the first six months of the year with a 1.5% rally, bringing its gains so far for 2023 to 32%. That’s the sharpest first-half jump in the tech-heavy index since 1983, when the Nasdaq rose 37%.
It’s a startling achievement, given what’s happened in the tech industry over the past four decades. Microsoft went public in 1986, sparking a PC software boom. Then came the internet browsers of the 1990s, leading up to the dot-com bubble years and the soaring prices of e-commerce, search and computer-networking stocks. The past decade saw the emergence of the mega-cap, trillion-dollar companies, which are now the most valuable enterprises in the U.S.
While those prior eras featured sustained rallies, none of them had a start to the year rivaling 2023.
Even more stunning, it’s happening this year while the U.S. economy is still at risk of slipping into recession and reckoning with a banking crisis, highlighted by the collapse in March of Silicon Valley Bank, the financial nucleus for much of the venture and startup world. The Federal Reserve also steadily increased its benchmark interest rate to the highest since 2007.
But momentum is always a driver when it comes to tech, and investors are notoriously fearful of missing out, even if they simultaneously worry about frothy valuations.
Coming off a miserable 2022, in which the Nasdaq lost one-third of its value, the big story was cost-cutting and efficiency. Mass layoffs at Alphabet, Meta and Amazon as well as at numerous smaller companies paved the way for a rebound in earnings and a more realistic outlook for growth.
Meta and Tesla, which both got hammered last year, have more than doubled in value so far in 2023. Alphabet is up 36% after dropping 39% in 2022.
None of those companies were around the last time the Nasdaq had a better start to the year. Meta CEO Zuckerberg, who created the company formerly known as Facebook in 2004, was born in 1984. Tesla was founded in 2003, five years after Google, the predecessor to Alphabet.
As 2023 got going, attention turned to artificial intelligence and a flood of activity around generative AI chatbots, which respond to text-based queries with intelligent and conversational responses. Microsoft-backed OpenAI has become a household name (and was No. 1 on CNBC’s Disruptor 50 list) with its ChatGPT program, and dollars are pouring into Nvidia, whose chips are used to power AI workloads at many of the companies taking advantage of the latest advancements.
Nvidia shares soared 190% in the first half, lifting the 30-year-old company’s market cap past $1 trillion.
“I think you’re going to continue to see tech dominate because we’re still all abuzz about AI,” said Bryn Talkington, managing partner at Requisite Capital Management, in an interview with CNBC’s “Closing Bell” on Thursday.
Talkington, whose firm holds Nvidia shares, said the chipmaker has a unique story, and that its growth is not shared across the industry. Rather, large companies working on AI have to spend heavily on Nvidia’s technology.
“Nvidia not only owns the shovels and axes of this AI goldrush,” Talkington said. “They actually are the only hardware store in town.”
Remember the $10,000 Lisa?
Apple hasn’t seen gains quite so dramatic, but the stock is still up 50% this year, trading at a record and pushing the iPhone maker to a $3 trillion market cap.
Apple still counts on the iPhone for the bulk of its revenue, but its latest jump into virtual reality with the announcement this month of the Vision Pro headset has helped reinvigorate investor enthusiasm. It was Apple’s first major product release since 2014, and will be available starting at $3,499 beginning early next year.
That sounds like a lot, except when compared to the price tag for the initial Lisa computer, which Apple rolled out 40 years ago. That PC, named after co-founder Steve Jobs’ daughter, started at $10,000, keeping it far out of the hands of mainstream consumers.
Apple’s revenue in 1983 was roughly $1 billion, or about the amount of money the company brought in on an average day in the first quarter of 2023 (Apple’s fiscal second quarter).
Tech was the clear story for the equity markets in the first half, as the broader S&P 500 notched a 16% gain and the Dow Jones Industrial Average rose just 2.9%.
Investors looking for red flags heading into the second half don’t have to look far.
Global economic concerns persist, highlighted by uncertainty surrounding the war in Russia and Ukraine and ongoing trade tensions with China. Short-term interest rates are now above 5%, meaning investors can get risk-free returns in the mid-single digits from certificates of deposit and high-yield savings accounts.
Another sign of skepticism is the absence of a tech IPO market, as emerging companies continue to sit on the sidelines despite brewing enthusiasm across the industry. There hasn’t been a notable venture capital-backed tech IPO in the U.S. since late 2021, and investors and bankers tell CNBC that the second half of the year is poised to remain quiet, as companies wait for better predictability in their numbers.
Jim Tierney, chief investment officer of U.S. concentrated growth at AllianceBernstein, told CNBC’s “Power Lunch” on Friday that there are plenty of challenges for investors to consider. Like Talkington, he’s unsure how much of a boost the broader corporate world is seeing from AI at the moment.
“Getting to AI specifically, I think we have to see benefit for all companies,” Tierney said. “That will come, I’m just not sure that’s going to happen in the second half of this year.”
Meanwhile, economic data is mixed. A survey earlier this month from CNBC and Morning Consult found that 92% of Americans are cutting back on spending as inflationary pressures persist.
“The fundamentals get tougher,” Tierney said. “You look at consumer spending today, the consumer is pulling back. All of that suggests that the fundamentals are more stretched here than not.”
WATCH: CNBC’s full interview with Ron Insana and Jim Tierney
The Google Calendar logo is displayed on a tablet.
Igor Golovniov | Sopa Images | Lightrocket | Getty Images
Google‘s popular online and mobile calendars no longer include reference to the first day of Black History Month or Women’s History month, among other holidays and events.
The company’s calendar previously had those days marked at the start of February and March, respectively, but they don’t appear for 2025.
The Verge first reported on the removals from Google Calendar late last week, which followed comments from users.
A Google spokesperson said the changes took place in the middle of last year.
“Some years ago, the Calendar team started manually adding a broader set of cultural moments in a wide number of countries around the world,” the spokesperson said in an email. “We got feedback that some other events and countries were missing — and maintaining hundreds of moments manually and consistently globally wasn’t scalable or sustainable,” the spokesperson added.
Google has made numerous changes lately that align with an altered political environment in the U.S. The company recently began scrapping its diversity hiring goals, becoming the latest tech giant to change its approach to hiring and promotions following the election of President Donald Trump. One of Trump’s first acts as president after taking office in January was to sign an executive order ending the government’s DEI programs and putting federal officials overseeing those initiatives on leave.
In late January, the company said it would change the name of the Gulf of Mexico to the “Gulf of America” in Google Maps after the Trump administration updates its “official government sources.” Google also said it would follow Trump and start using the name “Mount McKinley” for the mountain in Alaska currently called Denali.
On Google Calendar, the company has removed other events as well. It previously had Nov. 1 as the first day of Indigenous Peoples Month and June 1 as the start of LGBTQ+ Pride month.
The company spokesperson said that in mid-2024, the company “returned to showing only public holidays and national observances from timeanddate.com globally, while allowing users to manually add other important moments.” The timeanddate.com website says its company has 40 employees and is based in Norway.
Google Calendar users noticed the changes and left comments in the user support web pages and on social media. The user support site previously received comments from people upset about the company adding such observances.
Technology
Eight years after selling AppDynamics to Cisco, Jyoti Bansal is pursuing an unusual merger
Jyoti Bansal, co-founder and CEO of startup Harness.
Harness
Jyoti Bansal knows about weird acquisitions.
Eight years ago, his software company, AppDynamics, was on the doorstep of a blockbuster IPO. A day before the offering, Cisco swooped in and bought the company for $2.7 billion
Now Bansal is at the center of an equally unconventional combination.
Since 2020, Bansal has been running two startups as co-founder and CEO: Harness and Traceable. The former’s technology helps companies manage code and the latter’s software observes where companies are unintentionally letting out sensitive data.
Late this month or early next, Harness and Traceable will merge. The resulting company will have 1,100 employees, $250 million in expected 2025 annualized revenue, a 50% growth rate and a valuation of about $5 billion.
“It’s about the same size that AppDynamics was when we were about to go public,” Bansal told CNBC in an interview last week.
Through the combination, Bansal said, Harness will be able to sell more products to customers, and Traceable will be better insulated from competitors like HashiCorp, which IBM has agreed to buy, and Akamai, which acquired security startup Noname last year.
This time, Bansal wants an active stock ticker.
In an interview last year with CNBC’s Make It, Bansal said he was unfulfilled after selling AppDynamics and that he didn’t finish what he had started.
“Everyone told me, ‘You should retire. Go on the beach. What else do you need to do?'” Bansal said. “That was my first instinct, as well. I wanted to trek in the Himalayas, hike Machu Picchu, do a safari in Africa, see the fjords in Norway. In six months, my bucket list was done. And I started to realize: That’s not it for me.”
Bansal got back to work and set up Big Labs, a studio for exploring startup ideas. Big Labs spawned Harness in 2017 and then Traceable in 2020. Sanjay Nagaraj, Traceable’s other co-founder, recalled working on the security startup in a dedicated Big Labs room at Harness’ San Francisco headquarters.
The arrangement was unorthodox.
“I’ve never done this before, backed a CEO to run two companies simultaneously,” said Harrick, who joined Institutional Venture Partners in 2001 and sits on the boards of Harness and Traceable. “But Jyoti is that good. He’s not only a great executive, but he hires well and he delegates well, and so I just talked to Jyoti. I said, ‘This is a major risk.’ I got his assurance he wouldn’t do a third one.”
Establishing Harness and Traceable as separate companies made sense to Bansal at the time, because their products would typically get sold to different buyers within an organization. But that’s changed in the past year or two, he said, as engineering and technology leaders have started to also make decisions on procuring tools for securing code and data.
Employees took notice of the shift and, during all-hands meetings at both companies, would repeatedly ask Bansal about a consolidation, he said. Questions also came from clients.
“The Harness team would go set up a meeting with an executive at a bank or some of our customers,” Bansal said. “I would go into the meeting and the executive would say, ‘It’s a one-hour meeting. Can we save the last 15 minutes? Because I also want to talk about Traceable.'”
Bansal was effectively the first IT person at both companies, setting up the same Google productivity apps and Carta equity management software as each got started. A spokesperson said 70% of Traceable’s largest customers are Harness customers as well.
The cultures were also similar. As Harness and Traceable matured, Bansal picked a general manager to run each distinctive new product, or module. When examining revenue for the modules, executives at both startups rely on a theory that Battery Ventures investor Neeraj Agrawal calls “triple, triple, double, double, double,” or T2D3. The model, which Agrawal wrote about in TechCrunch in 2015, describes the annualized revenue growth that cloud software startups can target.
In November, Bansal told the two boards that his companies were on converging paths and that it would be difficult to keep them from competing with each other. He got clearance for a merger.
Initially, Traceable will operate as as its own unit within Harness, the parent company, and Nagaraj will be general manager. Bansal said the structure may change in the future.
He’s confident that the technologies will pair well together and can benefit from tighter integrations. Harness will be able to help clients understand the origin of their source code, and Traceable can show how people are using it.
Harrick calls it’s a good outcome, and said he’s excited to consolidate his bet on Bansal.
“I think it’s a benefit for all investors for him to focus on operating one company instead of two,” Harrick said.
French President Emmanuel Macron greets journalists after meetings with guests at the Elysee Palace before the opening ceremony of the Paris 2024 Olympic Games in Paris, France, July 26, 2024. REUTERS/Yara Nard
Yara Nardi | Reuters
France’s artificial intelligence sector will receive 109 billion euros ($112.6 billion) of private investment in the “coming years,” President Emmanuel Macron announced Sunday ahead of the country’s global AI summit.
Speaking with French broadcaster TF1, Macron described the multibillion-euro pledge as “the equivalent for France of what the United States announced with Stargate,” referring to U.S. President Donald Trump’s massive $500 billion private AI investment project.
The U.S. joint venture, dubbed Stargate, will see OpenAI, Oracle and SoftBank spend up to $500 billion on AI infrastructure in America over the next four years.
Meanwhile, the French financing will include commitments from the United Arab Emirates, American and Canadian investments funds and French companies like telecommunications firms Iliad and Orange, and aerospace and defense group Thales.
A few days before France’s AI Action Summit, which kicked off on Monday, the UAE said it would invest between 30 billion euros and 50 billion euros in the construction of a one-gigawatt AI data center in France as part of a campus focused on the technology’s development.
Iliad committed to spending 3 billion euros on AI infrastructure, while Paris-based AI firm Mistral announced plans to invest billions to build its own data center in France.
Victor Riparbelli, CEO of British AI startup Synthesia, said Macron’s 109-billion-euro investment plan was a “great” thing for the European AI ecosystem — but added that more is needed to ensure the continent is able to compete with tech heavyweights like the U.S. and China.
“We need to set the right foundations for Europe to thrive as an ecosystem,” Riparbelli told CNBC’s Arjun Kharpal Monday.
“It’s great that we invest more in infrastructure. I don’t think it’s the sole solution to the problem. There’s lots of other things we need to worry about as well. But what I think is really great, is there’s political will to actually do something,” he added.
Global AI race in focus
The Artificial Intelligence Action Summit will see world leaders and bosses from some of the leading companies developing the technology gather in Paris.
Big-name attendees include U.S. Vice President JD Vance, EU President Ursula von der Leyen, German Chancellor Olaf Scholz, Canadian Prime Minister Justin Trudeau, Google CEO Sundar Pichai, Microsoft President Brad Smith, OpenAI CEO Sam Altman, Google DeepMind CEO Demis Hassabis and Anthropic CEO Dario Amodei.
Elon Musk is currently not slated to attend.
On Saturday, Axios reported that OpenAI’s Altman will this week warn world leaders they need to widen their AI mindset so that, rather than just focusing on risk — as has often been the case in Europe — leaders will instead look to embrace growth and opportunity.
The emergence of Chinese firm DeepSeek’s breakthrough open-source AI model R1 in recent weeks has stirred debates in the industry around the huge capital expenditures companies are committing toward computing infrastructure to train their systems.
DeepSeek said total training costs for its newest AI model amounted to $5.6 million. However, doubts have been raised about DeepSeek’s claims.
Last month, semiconductor research firm SemiAnalysis estimated that DeepSeek’s hardware spend is higher than $500 million over the company’s history, adding that the startup’s research and development and ownership costs are significant.
On Sunday, Google DeepMind’s Hassabis said DeepSeek’s AI model is “probably the best work” he’s seen out of China — but added that, from a technology point of view, it was not a big change.
“Despite the hype, there’s no actual new scientific advance … it’s using known techniques [in AI],” Hassabis said, adding that the hype around Deepseek has been “exaggerated a little bit.”
Nevertheless, with companies spending billions on data centers filled with advanced semiconductors from U.S. chipmaker Nvidia, DeepSeek’s new model has led to worries of a potential bubble in the AI space.
Ahead of the AI summit, Mike Capone, CEO of U.S. software firm Qlik, told CNBC that DeepSeek is likely to be a major discussion point this week as world governments grapple with China’s AI advances.
“This summit isn’t just about AI—it’s about influence,” Capone told CNBC on Friday. “Expect a strategic messaging war as U.S., French, and UK AI leaders downplay DeepSeek’s relevance while China works to prove it’s not just catching up — it’s setting the pace.”
“AI diplomacy is now as critical as AI development. The power struggle won’t be about who builds the best model; it’ll be about who controls the AI narrative,” he added.
– CNBC’s Arjun Kharpal contributed to this report
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