July 16, 2024

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NASDAQ Reaches All-Time Highs: Is AI Shaping a New Economic Age?

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Collaborations with NASDAQ giants expected to contribute to 19.4% of the UAE’s GDP from the tech sector in the next 10 years

The exponential growth of AI is propelling NASDAQ to all-time highs. In fact, with NASDAQ Futures approaching the 20,000 threshold, US 100 retests the upper border of its up-trending channel since October 2022.

From Open AI to Microsoft’s Copilot, the momentum of the AI trend is overcoming market obstacles and surpassing concerns over monetary policies and regulatory risks. According to a McKinsey Global Survey, 72% of surveyed organizations now utilize AI, highlighting its transformative impact on the tech sector and its ability to drive sustained market growth, reinforcing its crucial role in shaping the future of technology and economics.

In the UAE, the growth of NASDAQ, fueled by AI advancements, seems to have a positive ripple effect on the country. As leading AI companies on NASDAQ continue to thrive, their groundbreaking innovations enhance the UAE’s tech landscape. This synergy not only stimulates economic growth but also aligns with the UAE’s vision of a diversified, knowledge-based economy, solidifying its role as a leader in global technological progress.

The U.S. and UAE’s strategic partnership in AI actually reflects a shared commitment to technological innovation. The UAE’s significant investment in U.S. AI startups, combined with U.S. support for AI platforms and education in the UAE, forms the backbone of this crucial alliance, contributing to the UAE’s transition from an oil and gas-dependent economy to a data-driven powerhouse. Collaborations with NASDAQ giants like Microsoft and NVIDIA are pivotal in establishing the UAE as a global AI hub, fostering economic diversification and innovation, and contributing to an anticipated 19.4% of the country’s GDP from the tech sector within the next decade.

Digging deeper into the impact of monetary policies on the AI sector and NASDAQ, the recent drop in U.S. consumer price inflation metrics has fueled positive sentiment across the markets, driving the NASDAQ to new record highs. Although inflation rates are gradually moving towards the Fed’s 2% target, the 5.5% interest rate remains in place with only one rate cut anticipated this year, as inflation levels are still considered elevated.

Similarly, the Central Bank of the UAE (CBUAE) is expected to hold rates in parallel, which will help taper down its own inflationary pressures. The market reversed nearly half of its CPI news gains following the Fed’s statement, yet the NASDAQ continued its uptrend, surpassing the 19600 high.

NASDAQ Reaches All-Time Highs: Is AI Shaping a New Economic Age?
Razan Hilal, Market Analyst, CMT at FOREX.com

“By early 2024, the global adoption of AI has surged significantly. As countries strive to maximize AI benefits while ensuring regulatory compliance, the resilience of the tech and AI sectors continues to outpace concerns over monetary policy and regulation”, comments Razan Hilal, Market Analyst, CMT at FOREX.com. She adds: “These sectors are foundational to global efforts to achieve long-term goals, maintaining high levels of innovation and productivity. While occasional corrections in growth trends may occur, the primary trend and long-term investments remain aligned with sustainable agendas, indicating continued strength and a positive future for the tech and AI markets.”

In terms of AI regulations, and although they vary globally, an analysis by EY of eight jurisdictions revealed four common regulatory areas aimed at mitigating AI risks while promoting its economic and social benefits. These include: Respecting human rights, sustainability, and transparency; ensuring cybersecurity, data privacy, and intellectual property protection; tailoring compliance obligations to specific risk levels; promoting private sector collaboration to balance innovation with regulatory requirements; and fostering international cooperation to address risks, safety, and security concerns.

Therefore, while AI is showing considerable resilience driving NASDAQ Indices to all-time highs, countries, including the UAE which is largely benefiting from surging AI technologies, strive to establish a robust and ethical AI sector through regulations designed to support growth and align with their future economic and geopolitical objectives, without restricting innovation.

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