Tech earnings may be most important thing for 2024 markets

Meta Platforms (META) and Nvidia (NVDA) shares are moving higher in Friday's pre-market session after the Nasdaq 100 (^NDX) closed Thursday at a record high, pushed higher by tech stock vitality in 2024.

Yahoo Finance Market Reporter Josh Schafer points to the roles AI enthusiasm and tech earnings from the Magnificent Seven will play in propelling markets higher after a shaky start to the year.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

BRAD SMITH: Futures racing higher this morning, as tech stocks breathe life back into the sluggish market. Meta and NVIDIA, two leaders in 2023's Magnificent Seven rally helping bring stocks out of their slump, as Meta CEO Mark Zuckerberg says, the company's, quote, "future roadmap for AI includes 350,000 of NVIDIA'S H100 graphics cards."

This follows more great chip industry news from Taiwan Semiconductor, as well as a bullish call on Apple's stock. All of these news pushing the NASDAQ 100 to close at an all-time high on Thursday, according to Bank of America. Close to that all time high there here. We're continuing to track that top gainers from last year. Once again, top pick for most investors.

We have "Yahoo Finance's" Josh Schafer with us to break down more. Josh, what more do we need to say?

[LAUGHS]

JOSH SCHAFER: AI.

BRAD SMITH: AI.

JOSH SCHAFER: Well, I think we could say AI and hang up the phone. We're back-- we're back--

SEANA SMITH: It seemed like a Davos. Everyone was talking about AI.

JOSH SCHAFER: We're back to that moment. We spent two months talking about regional banks, and talking about some different trades, and getting people excited about other things that don't have to do with tech. And then if you really look at the market action over the first three weeks, you could just own the Magnificent Seven and go home because the Magnificent Seven is what is driving this market again, when you look at performance, when you look at it compared to the S&P 500 like we're showing on your screen now, outperforming the S&P 500 in the month when we're talking about just January.

And then you see the Russell 2000 really coming back to Earth in the month after that big rally. We've had the Russell 2000, of course, a pretty regional bank heavy index. Interesting to just see this trade, guys. But also important, I think, for the market, when we talk about how big tech is overall weighting in the S&P 500, and being able to bring us higher.

SEANA SMITH: Yeah. And Josh, as you were reporting in your conversation with Keith Lerner over at Truist, he was saying, it really just comes down to math, given the fact, the size and how much the Magnificent Seven accounts for the S&P and really the broader market here.

My question though to you is in terms of the strategists and what you're hearing, what you're seeing in these notes, how much of this market momentum that we've seen at least over the last 48 hours is renewed excitement around tech? How much is riding on these earnings results here that we're going to be getting in the coming weeks?

JOSH SCHAFER: Oh, a lot. And I think it's important to remember like, yes, you have the headset out from Apple today. You have Mark Zuckerberg going on Instagram and talking about what they're doing with Meta and AI. But you also had strong earnings from Taiwan Semiconductor. And you had them talking about AI growth of 20%. And I think it's important to remember that's part of really what I think when we saw futures tick off before Thursday's trading session. That was where the movement started to come. And you're going to see that really matter in earnings.

And the other thing too guys that I think is important to remember here, when we're talking about owning these companies, everyone's had a little bit of a different stage in their AI story. And that's going to be something, I think, to focus on over the next two weeks. When we're talking about Microsoft, when we're talking about Google or Alphabet, that's a different AI story than Meta. And it's a different AI story than Apple, who pretty much just pulled that lever this week, and hadn't really mentioned it before.

So I think it's important to remember what the investor expectations are for AI before the company that you own reports earnings.

BRAD SMITH: Right. Because there's so many different-- there's three core buckets that you can think about. That generative AI, as the latest form an iteration of AI innovation, that a lot of these companies are going to have to think about, applications or the models or the chips. And we've already seen the chips play out as well.

SEANA SMITH: And for investors, it's not just enough just to mention AI. We talked about the fact that it was mentioned so many times in earnings calls, but really starting to-- and it has. I think you can make the case last quarter to really turning into a show me story, just in terms of what exactly this means to the bottom lines. All right, Josh. Thanks so much.