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Nasdaq Composite Posed for Best First Half in 40 Years
Tech Stocks Rebounding
The Nasdaq Composite has had an impressive run so far in 2019, poised to have its best first half since 1983. The rallying tech-heavy index has benefited from investors' bets on the Federal Reserve ending interest rate hikes and investment in artificial intelligence. The rotation back into growth names has driven the Nasdaq higher, with mega-cap names such as Nvidia, Microsoft, and Amazon seeing substantial gains.
Small-Cap Winners
While the mega-cap names have had significant gains, smaller stocks have led the way in the largest gains so far this year for Nasdaq. Two biotechs with market caps above $500 million, ImmunoGen and Applied Digital, have had close to 150% and 400% run-ups in their stock prices, respectively.
ImmunoGen
ImmunoGen's phase three trial of its experimental drug for ovarian cancer has brought about practice-changing results, demonstrating a "statistically significant and clinically meaningful improvement" in prolonging the lives of patients. While the stock has an average rating of buy, there is a 6% downside to the average analyst price target, according to FactSet.
Applied Digital
Applied Digital, with a forecasted fourth-quarter revenue of $22 million, has seen nearly a 400% increase in its stock price this year. The digital technology company has an average rating of buy, but there is a 44% upside to the average analyst price target, per FactSet. The stock fell slightly after its guidance for the fiscal year missed analysts' expectations.
The Nasdaq Composite's impressive performance so far this year has been driven by a rotation back into growth names, as well as investments in artificial intelligence. While mega-cap stocks have made gains, smaller stocks, such as Immunogen and Applied Digital, have been the biggest winners.
For new businesses, the current state of the Nasdaq Composite is a positive sign of continued growth and investment in the tech industry. The index's strong performance this year is largely due to a renewed interest in growth stocks and investments in artificial intelligence. This suggests that there is still plenty of room for innovation and expansion in the tech industry, especially for smaller companies such as ImmunoGen and Applied Digital, which have seen significant gains.
The success of ImmunoGen's drug trial for ovarian cancer and the impressive revenue forecast for Applied Digital are also indicators of the potential for success in the biotech and technology sectors. However, new businesses looking to enter these industries must be prepared to face fierce competition from established companies. It is also important for new businesses to keep an eye on macroeconomic factors such as interest rates and trade policies, which can significantly impact the stock market and therefore their businesses.
Overall, the Nasdaq Composite's performance this year should provide a boost in confidence for new businesses in the tech industry. As the market continues to grow and investments in innovative technologies increase, there will likely be ample opportunities for new players to make their mark.
