Trevor Jennewine, The Motley Fool
4 min read
The U.S. stock market had a fantastic second quarter. Investors brushed aside economic uncertainty tied to the Iran war as U.S. corporate profits hit a record high. Financial results were surprisingly strong across every market sector, but technology companies involved in artificial intelligence hardware led the charge.
In turn, while the broad-based S&P 500 (SNPINDEX: ^GSPC) added 15% and the blue chip Dow Jones Industrial Average (DJINDICES: ^DJI) advanced 13%, it was the technology-heavy Nasdaq Composite (NASDAQINDEX: ^IXIC) that delivered a truly impressive performance. The index skyrocketed 21% in Q2 2026 to achieve its best quarterly performance since Q2 2020.
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History says this will happen next.
The Nasdaq Composite is synonymous with AI growth stocks
The Nasdaq Composite tracks more than 3,300 stocks listed on the Nasdaq Exchange. The index has become synonymous with artificial intelligence (AI) growth stocks due to its technology-heavy composition. Companies in the technology sector account for 61% of the Nasdaq by market value, compared to 38% of the S&P 500.
The Nasdaq’s reputation as the premier destination for technology companies, coupled with its less stringent listing requirements and lower fees compared to the New York Stock Exchange, has created a self-reinforcing flywheel. Growth investors gravitate to index funds that track the Nasdaq Composite (or a subset), so technology companies eager to tap that liquidity choose to list their shares on the exchange.
Space Exploration Technologies is a recent example. SpaceX listed shares on the Nasdaq Exchange for its historic IPO. But other companies have actually moved their shares to the exchange since the AI boom began, including Palantir Technologies and Shopify. Beyond that, all seven “Magnificent Seven” stocks trade on the Nasdaq Exchange, as do AI chipmakers AMD, Broadcom, Intel, Micron, and Sandisk.
So what? The artificial intelligence boom began in earnest in January 2023. Since then, the Nasdaq Composite has risen 147%, while the S&P 500 has risen 95%. The Nasdaq’s technology-centric composition explains why it outperformed by 52 percentage points and why the index may continue to perform well as the AI boom unfolds.
History says the Nasdaq Composite could soar 24% in the next year
