"Dow Peaks First, Then Comes Nasdaq Rally... S&P 500 Headed for '8,000'" [Click eStock]

Hanwha Investment Expects Further Gains in Big Tech and Semiconductor Stocks

Hanwha Investment & Securities stated on August 5 that after the Dow Jones Industrial Average hit a new all-time high on the first trading day of August, "Historically, when the Dow reaches a peak first, the Nasdaq often follows," indicating expectations for further gains in big tech and semiconductor stocks. The company also maintained its previous outlook that the S&P 500 could reach 8,000 during the third quarter.

Han Sanghee, a researcher at Hanwha Investment & Securities, highlighted the strong performance of the U.S. market, which accounts for over 60% of global stock markets, following a volatile July centered on memory semiconductors. He viewed the recent market movement as evidence that the semiconductor weakness was a typical market correction.

The basis lies in historical statistics. Since 2000, instances where the Dow Jones Industrial Average entered record-high territory before the Nasdaq have occurred about once a year on average. Even when a correction followed, the Nasdaq subsequently surpassed its previous highs at least once. In other words, after the Dow hits a peak, risk appetite tends to spread market-wide, increasing the probability that funds move into the Nasdaq. This trend was especially evident during U.S. economic expansions in 2013, 2017, and 2021. The exceptions were 2018 and 2022, when the start of the U.S.-China trade conflict and monetary tightening by the Federal Reserve held back the market, respectively.

Han noted that current conditions are different. Ample liquidity is available due to the Federal Reserve’s continued short-term bond purchases, and strong second-quarter earnings have strengthened confidence in corporate operational results. He also pointed out that share prices of private equity firms—generally considered high-risk—soared after all big tech companies reported their cloud earnings as of the end of July. He forecasted that the upward trend is expected to continue until Nvidia’s earnings announcement on August 27.

There is further evidence that artificial intelligence (AI) investments are translating into real profits. Hyperscalers operating large-scale data centers reported both higher revenue growth and improved profitability in the second quarter. Microsoft saw a 43% increase in revenue from its Azure cloud service, significantly outpacing the 27% growth posted in the first quarter of 2023. Microsoft’s remaining contract balance—which has not yet been recognized as revenue—surged to USD 678 billion, up 84% year-over-year. Amazon reported a 37% growth rate in Amazon Web Services (AWS) revenue, the highest since the first quarter of 2022, and its operating margin rose from 33% in the second quarter of 2025 to as high as 39%. Alphabet achieved an 82% jump in cloud revenue and set a record-high operating margin of 36%.

Investor sentiment has also undergone a shift. Alphabet investors, who had previously been concerned about free cash flow (FCF) turning negative, changed their stance within a week after confirmation of accelerated cloud revenue growth and improved margins. Similarly, despite worsening FCF at Amazon, the market drove up the stock price by focusing on AWS performance. Han stated, "Market participants' focus has shifted to positive news," adding, "We expect further gains in big tech and semiconductor stocks."

This content was produced with the assistance of AI translation services.